Setting up and maintaining a business in Saudi Arabia can be complex, especially for foreign investors unfamiliar with the local regulatory environment. The Kingdom of Saudi Arabia (KSA) has streamlined many of its processes through a number of digital portals that help to facilitate everything from business registration to employee management. Understanding how to navigate these portals and the requirements for setting up and maintaining a company in Saudi Arabia is crucial for ensuring compliance and smooth operations.
Company formation requirements in Saudi Arabia and the wider GCC
Starting a business in Saudi Arabia, like most of the Gulf Cooperation Council (GCC) region, involves navigating a series of legal, regulatory, and logistical considerations. Whilst each GCC country has its own set of rules, there can be similarities to keep in mind.
Business structure: The most common business structures in Saudi Arabia and across the GCC are limited liability companies (LLCs) and branches of foreign companies. LLCs are typically the preferred choice for foreign investors, allowing foreign ownership in certain sectors.
Licensing and registration: Foreign investors must register with the relevant government authority, such as MISA and apply for licenses based on their industry. This process often requires a local sponsor (in Saudi Arabia), partner, or agent, although recent reforms and liberalisation efforts have eased this requirement for specific sectors.
Local sponsorship: In Saudi Arabia, businesses generally need a local sponsor for certain types of entities. However, recent reforms have made 100% foreign ownership in certain sectors possible, especially in tourism, entertainment and technology. This is part of Saudi Arabia’s Vision 2030, which aims to reduce the Kingdom’s dependency on oil and boost foreign investment.
Legal documentation: For obtaining the commercial registration, a prerequisite for operating legally in the region, business owners must prepare a variety of documents, including proof of address, a business plan, and sometimes proof of financial stability or previous business experience.
Foreign investors must submit/provide a copy of the Trade license, AOA/MOA and audited financial statements for the past 12 months of the parent company, i.e. the shareholding company, in KSA.
Capital requirements: In Saudi Arabia, a limited liability company generally requires a minimum capital investment, depending on its business activity and nature.
Saudization: Companies in the Kingdom must employ Saudi nationals. The Qiwa platform helps businesses manage Saudization quotas by tracking the percentage of Saudi nationals employed compared to foreign workers. Companies failing to meet these quotas may face fines or restrictions on hiring foreign nationals.
Foreign businesses looking to bring in employees from abroad must ensure compliance with Saudi visa regulations. The process is managed through the Qiwa portal.
What are the key Saudi Government portals for business?
Qiwa is the central portal for managing business operations related to employees and labour compliance. Through Qiwa, employers can manage employee contracts, ensure compliance with Saudization requirements, and process work visas and permits.
Mudad is the platform for uploading Wage Protection System files, issuing the compliance certificate, managing employee payrolls and ensuring compliance with the WPS programme.
The Ministry of Investment of Saudi Arabia (MISA) is the first step for foreign businesses looking to establish themselves in the Kingdom. This platform allows investors to apply for licenses to operate in Saudi Arabia, register their business, and obtain the necessary approvals.
The Ministry of Commerce (MoC) portal is critical for company registration, and through it, businesses can apply for a commercial registration (CR) certificate, which is essential for doing business in Saudi Arabia. This is a mandatory step for any foreign entity wishing to set up a presence in the Kingdom.
General Organisation for Social Insurance (GOSI) provides benefits such as pensions and healthcare for workers. Businesses must register their employees with GOSI for social insurance, and contributions are mandatory for both Saudi nationals and expatriates.
Zakat, Tax and Customs Authority (ZATCA) is a comprehensive digital platform for managing taxes, customs, and Zakat compliance in Saudi Arabia.
Updates to the QIWA portal and MoHRSD
To create a unified platform and a central hub for managing labour-related matters in Saudi Arabia, Qiwa has merged with the Ministry of Human Resources and Social Development (MoHRSD). The Qiwa portal now serves as the primary tool for businesses to handle a wide range of functions such as employee contracts, work visas, Saudization compliance, and employee records. This merger ensures that all labour-related services are accessible in one place, making it easier for companies to stay compliant with labour laws.
For foreign businesses, the integration of Qiwa with MoHRSD has made it easier to navigate the complexities of the Saudi workforce, from hiring and termination processes to tracking Saudization requirements (the employment of Saudi nationals in various roles). Businesses can use Qiwa to process work permits, track employee status, and manage the legalities of hiring foreign nationals.
