Investment guide in Saudi Arabia for foreigners

In the fact, the Saudi economy is one of the  G20 in the world, and it is also one of the promising markets with high purchasing power, which motivates investors to enter it, but this is not the only criterion that investors rely on to start its work in a particular country, where the investor wants to ensure the availability of legal guarantees and judicial protection in that country, especially issues related to the investment system, the corporate system, labor, taxes and intellectual property, and we review in this article the principles of investment In Saudi Arabia, the investment sectors, the types of licenses required to conduct the activity, and finally the legal forms available to investment entities.

Investment Principles and Policies in the KSA

• Ensure equality between Saudi and non-Saudi investors, and among non-Saudi investors.
• Ensure the protection of investments, in line with the Kingdom’s regulations.
• Enhance the sustainability of investments and deal with investor complaints in a transparent manner.
• Provide investment incentives when needed and ensure full transparency when granting. Provide a list of investment incentives and grant them in accordance with general, clear, and non-discriminatory criteria.
• Maintain environmental and social standards in order to ensure that Saudi and non-Saudi investors comply with regulations regarding labor, health, and environmental safety in accordance with national regulations and policies and the international conventions in which Saudi has acceded.
• Facilitate entry procedures for non-Saudi employees including technicians,
• administrators, and their dependents. Arrange their residency in the Kingdom to facilitate their participation in activities related to foreign investments in accordance with the Kingdom’s regulations and its international obligations.
• Transfer and localize science and technology resulting from foreign direct investment in accordance with the Kingdom’s international obligations

Investment Sectors in Saudi Arabia

Among the most prominent sectors in which Saudi Arabia seeks to attract foreign investment are:

1. Transformative industries.
2. Communication and information technology.
3. Education and smart education field.
4. The health field.
5. Real estate investment, tourism, and entertainment.
6. Investing in Securities and Bank Deposits.

Licenses Types in Saudi Arabia

• Services License

Service activity license comprises the following activities: (Construction, Administrative Investment, Information Technology, Tourism, Training, Health, Insurance, and Re-Insurance, Education, Advertising and Media, Logistic Services, Organizing Exhibitions, Catering and Food Services, Financial Services, Aviation, and Handling Services, etc.).

• Industrial License

This service is provided to all industrial licenses, such as heavy and light industries and transformative industries.

• License for a Scientific and Technical Office

This service is provided to foreign companies that have a Saudi agent distributing the company’s products in the KSA, and such companies that wish to open an office to provide scientific and technical services to agents, distributors and consumers of their products.

• Temporary certificate to submit proposals for government projects

Entities that need to bid for government projects are able to submit an application to Ministry of Investment by requesting a temporary certificate to bid for government projects.

• Real Estate License

This service is provided to foreign companies in property field in case that the total cost of the project, in terms of both land and construction, is not less than 30 million Saudi riyals in terms of land and construction and the investment established outside the borders of the cities of Mecca and Medina.

• Temporary licenses for the performance of a government/ semi-government contract

This service shall be provided to the foreign entities that do not have a foreign investment License for the contract activity, for which a government or semi-government contract is awarded, providing the possibility to apply for a temporary license to execute a government or semi-government contract, this license expires at the end of the contract tenor.

• Commercial License

Considering the importance of commercial activities in the KSA and the pursuit the Kingdom to facilitate the entry of foreign entities to perform an activity in the wholesale trade and retail trade in the Saudi market, according to specific guidelines and conditions, it has introduced a number of options for ambitious foreign, namely:

• Commercial license with Saudi shareholder

The existence of a Saudi shareholder in the investment license with a share of not less than 25% of the company.

1. 100% foreign commercial license

This service is limited to foreign companies that have a presence at least in (3) regional or international markets. And the minimum capital required is (30) million Saudi Riyals. And other conditions.

• License for transport

This service is provided for international companies that wish to provide public land transport services. The KSA provides many areas for investment in public transport services, namely:

1. Service for issuing license to practice bus public transportation within cities.
2. Service for issuing license to practice metro public transportation within cities.
3. Service for issuing license to practice other transport.
4. 9. Consulting License for Engineering Offices

This service is provided to foreign companies that wish to provide engineering consultation services inside the KSA with a 100% possession, according to conditions.

•  Entrepreneur Licenses

The service is provided to business leaders who wish to establish emerging technical, innovative or distinguished companies capable of expansion and growth to provide a better and different product or service in the KSA market and have supportive entities approved by the ministry of investment. on condition approve the license applications by Authorized Saudi universities or business incubators.

11. 11. Consulting License for Technical & Economic Communication Offices

This license aims to enable countries wishing to invest in KSA to study the markets and prepare reports to be submitted to the concerned bodies in the country that want to have license, The office shall submit an annual summary of its businesses to the KSA investment Ministry, and the office is prohibited to execute any contracts, businesses, or investments in KSA, whether directly or indirectly.

• license for Serving agents and providing workers services

Foreign companies are allowed to engage the activities of domestic labor placement services and temporary employment agency activities for home services in KSA. According the conditions.

• Licensing of Audiovisual Media

The service provided to foreign companies that wish to conduct audio and visual activities, According the conditions.

•  Licensing of Printing and Publishing

The service provided to foreign companies that wish to conduct many activities in printing and publishing activities, According the conditions.

• Professional license with Saudi shareholder

The service provided to foreign companies wishing to practice professional activities in the Kingdom with a Saudi partner, According the conditions.

• Agricultural License

This service is provided to establishments that wish to practice agricultural activities, According the conditions.

•  Mining License

This service is provided to establishments that wish to practice mining activities in the KSA, According to the conditions.

• License issuance service for beneficiaries of the corrective period for the national program to combat commercial concealment

This service is provided to entities wishing to rectify their situation during the corrective period of the KSA program to combat commercial concealment by transferring them to investment entities licensed in accordance with the foreign investment regulation.

• Regional Headquarters (RHQ) License

This service is provided to Multinational Groups wishing to establish their RHQ in the KSA as a unit duly established under the laws of Saudi Arabia for the purpose of supporting, managing, and providing strategic direction to its branches, subsidiaries and affiliates operating in MENA region.

List of Businesses Excluded from Foreign Investment

1. Oil exploration, drilling and production. Except the services related to mining sector listed at (CPC 5115+883) in International Industrial classification codes.
2. Catering to military sectors.
3. Security and detective services.
4. Real estate investment in Makkah and Madina.
5. Tourist orientation and guidance services related to Hajj.
6. Recruitment services.
7. Commission agents.
8. Fishing/ hunting marine living resources.
9. Investment Companies Types

Investment Saudi law seeks to facilitate the entry of foreign value-added enterprises and Premium residence holders to discover the Saudi market and provide the opportunity to establish companies to practice various activities by establishing the following legal entities:

1. Limited Liability Company (LLC).
2. Limited Liability One-person Company.
3. Joint Stock Company.
4. Foreign Company Branch.
5. Solidarity professional company

[1] Related to the limit of the cost of a single project to be constructed. There is no minimum limit for the capital of property development projects.

[2] Government and semi-government companies are excluded.

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