Top 30 FAQ about investing in Saudi Arabia

1.    What legal system governs foreign investment in Saudi Arabia?

The legal framework governing foreign investment in Saudi Arabia has traditionally been based on the Foreign Investment Law of 2000. However, on August 11, 2024, the Kingdom introduced a new Investment Law, which repealed the existing Foreign Investment Law. This New Investment Law has taken effect six months after its publication in the official gazette, in February 2025, marking a significant shift in the regulatory landscape.

The new law streamlines the investment process by replacing complex licensing requirements with a simplified registration system, creating a more inclusive and transparent environment for domestic and international investors. Key features of the New Investment Law include guarantees of equal treatment for investors, protections against expropriation, and the free transfer of capital. Additionally, it addresses national security concerns through a transparent and internationally compliant framework.

2.    What are the key changes under the 2025 Investment Law?

The New Investment Law in Saudi Arabia represents a significant shift in the Kingdom’s investment landscape. Key changes include the elimination of the Foreign Investment License, replacing it with a streamlined registration process. This law applies equally to both foreign and domestic investors, guaranteeing equal treatment and protection against expropriation. It expands investment freedom by allowing foreign investment in most sectors, subject to a “Negative List” of restricted activities. Additionally, the law introduces a transparent framework for granting investment incentives based on objective criteria and provides for alternative dispute resolution mechanisms.

3.    Which sectors are restricted for foreign investors?

Saudi Arabia’s Foreign Investment Law, specifically Article 3 (“Freedom of Investment”), generally allows foreign investors to own businesses in most sectors. with exceptions outlined in a “Negative List.” The primary exceptions are a few restricted sectors, such as broadcasting and aviation. This article grants investors broad freedom to invest in available sectors and economic activities, provided they comply with relevant laws, regulations, and instructions.

Sharia law, as the foundation of the Saudi legal system, influences various aspects of business contracts. While the New Investment Law provides a modern framework, Sharia principles remain relevant, particularly in areas like contract formation, validity, and enforcement. For example, the concept of “riba” (interest) is prohibited, impacting financing arrangements. Additionally, Sharia principles emphasize good faith, fairness, and the importance of clear and unambiguous contractual terms. While the specific application of Sharia principles may vary, understanding their influence is crucial for businesses operating in Saudi Arabia.

4.    What are the merger control regulations?

The merger control regulations are based on:

• Competition Authority: The Competition Authority of Saudi Arabia oversees merger control regulations.
• Thresholds: Transactions exceeding specific thresholds in terms of market share or transaction value may require approval from the Competition Authority.
• Objectives: To prevent anti-competitive practices and ensure fair competition in the market.

5.    Can foreign investors own 100% of a Saudi company?

• Yes: Under the Saudi Investment Law, foreign investors can generally own 100% of a Saudi company in most sectors.
• A foreign investor with adequate capital and vision can own a company that is 100% owned in Saudi Arabia. The under-mentioned steps involved in the company formation process must be followed.

6.    What are common investment structures?

According to the Services Manual, the Ministry of Investment seeks to facilitate the entry of value-added foreign establishments and holders of distinguished residency to discover the Saudi market and provide the opportunity to establish companies to practice various activities through the establishment of one of the following legal entities:

1. Limited Liability Company: The most common structure for foreign investment, offering limited liability to shareholders.
2. A one-person limited liability company.
3. Joint Stock Company: Partnership with a Saudi entity, combining the strengths and expertise of both parties.
4. Branch of a foreign company: Represents a foreign company within Saudi Arabia, subject to regulations governing branch operations.
5. Solidarity Professional company.
6. Simplified Joint Stock Company

7.    What are the capital requirements for setting up a business?

There are a varied capital requirements depending on the business activity, legal structure, and industry regulations. For instance, the minimum capital required to practice wholesale and retail trade activity, according to Ministry of Investment for foreign companies with a 100% ownership percentage, is (30) million Saudi Riyals. Therefore, consulting with relevant government agencies and legal professionals for specific capital requirements could be essential.

8.    How do I obtain an investment license?

To obtain an investment license in Saudi Arabia through the Ministry of Investment of Saudi Arabia (MISA), investors must follow these key steps:

1. Determine the appropriate MISA license type based on business activities and structure (e.g., foreign investment, national investment, branch, representative office).
2. Choose a business structure (LLC, One-Person Company, Joint Stock Company, Foreign Company Branch, or Solidarity Professional Company), understanding the implications of each.
3. Gather required documentation, which varies by business type but generally includes:
   • Authenticated copy of the entity’s commercial registration from its original country.
   • Audited financial statements for the last year, authenticated by the Saudi Embassy.
   • Attested Articles/Memorandum of Association.
   • Apostille Seal for companies in Hague Convention countries.
4. Apply online through MISA’s e-services portal, including registration, form completion (entity, stakeholder, and contact information), and account verification.
5. Reserve a business name through the Ministry of Commerce’s website. Branches of foreign companies typically use the parent company name, while subsidiaries have more flexibility. If applying for multiple MISA licenses under one entity, reserve distinct names.
6. Draft Articles of Association (AoA) outlining company operations and governance. A single AoA can cover multiple licenses under one entity, listing all activities and associated license details.
7. Obtain a Commercial Registration (CR) from the Ministry of Commerce. If applying for multiple licenses, obtain the main CR first, then apply for subsequent branch CRs through the Ministry of Commerce’s portal. Finally, ensure all accounts are registered and updated in relevant government portals.

10. What are the benefits of establishing a Regional Headquarters (RHQ)?

The Regional Headquarters (RHQ) can unlock a spectrum of advantages including;

• Tax Incentives: Potential tax benefits and incentives may be available for RHQs.
• Streamlined Operations: Facilitates regional expansion and management of operations across the region.
• Government Support: Access to government support and resources for regional business development.
• Exemption from Saudization requirements: Enjoy a decade-long exemption from this stipulation.
• Work visas: Acquire work visas for Saudi nationals in restricted professions.
• Ajeer Program access: Extend opportunities to dependents of RHQ employees.
• Residency relaxation: Increase the age limit for male dependents’ residency to 25 years.
• Professional accreditation exemption: Waive professional accreditation requirements if duly accredited in the country of origin.
• MISA subscription waiver: Access MISA investor services centers with waived subscription fees.
• Discounted services: Avail discounted rates and preferential treatment for MISA’s services.

11. What is the corporate income tax rate?

• According to the Saudi Income tax law, the corporate income tax rate is 20%. Moreover, the corporate income tax is payable by non-Saudi/non-GCC shareholders in a Saudi Capital Company and non-residents doing business in Saudi Arabia through Permanent Establishment.
• The rate of taxpayers in the exploitation of the natural gas sector is 20%, and the rate of those producing oil and hydrocarbons ranges from 50% – 85% depending on capital investment in Saudi. Remittance of profits abroad is considered deemed dividends subject to a 5% withholding tax.

12. How does VAT apply to transactions?

Value-Added Tax (VAT) in Saudi Arabia is a consumption tax imposed on most goods and services. Currently, the standard VAT rate is 15%, a significant increase from the initial 5% rate implemented in 2018. VAT is levied at each stage of the supply chain, from production and distribution to the final sale to the consumer. While most goods and services are subject to VAT, certain categories, such as financial services and residential real estate, are exempt. Businesses exceeding a specific revenue threshold are required to register for VAT, collect tax from customers, and file regular returns with the Zakat, Tax, and Customs Authority (ZATCA).

13. Are there customs duty exemptions?

Yes, Saudi Arabia offers customs duty exemptions under specific circumstances. These include exemptions for goods used in manufacturing or research and development (application required 6 months before to 6 months after import) and exemptions for personal belongings/used household items for Saudi citizens returning from at least six months abroad and for expatriates relocating to the Kingdom for the first time. These personal exemptions have conditions related to personal use, origin from the previous residence, proof of first-time residency (for foreigners), arrival within six months of the person, and exclusion of transportation means. Parcels and postal deliveries are also potentially exempt.

Commercial samples may also be exempt if they meet specific criteria: value not exceeding SR5,000, formal request submitted, non-commercial quantity, not intended for sale, and not previously exempted within six months.

New regulations also allow for goods clearance with deferred customs duty payment (30 days) under certain conditions: registration of imports with commercial registration number, Saudi residency, and 12-month VAT registration, commitment to tax/zakat/customs declarations and payments, no history of tax evasion/smuggling, no bankruptcy proceedings, and meeting financial solvency standards.

14. Can profits be repatriated freely?

Yes: Generally, according to article Seven of the Foreign Investment Law stipulates that: “A foreign investor may repatriate its share from the sale of equity, liquidation surplus, or profits generated by the firm, or dispose of the same in any other lawful manner.”

The profits can be repatriated freely subject to applicable tax laws and regulations. The Investment Law reaffirms and broadens provisions in the Foreign Investment Law for guaranteeing investors the right to repatriate funds, including profits and proceeds of liquidation or sale of the investment, and protection from expropriation and supplements these with guarantees of equal treatment of local and foreign investors under similar circumstances, protection of intellectual property and trade secrets and facilitation of administrative procedures and provision of necessary governmental support, including available information and statistical data.

15. Which sectors are prioritized under Vision 2030?

Saudi Vision 2030 prioritizes several key sectors for economic diversification and development, including:

• Tourism: Developing world-class tourist destinations, promoting cultural heritage, and attracting international visitors.
• Entertainment: Expanding entertainment options, such as cinemas, concerts, and sporting events, to enhance the quality of life for citizens and residents.
• Technology: Fostering innovation and entrepreneurship in the technology sector, including artificial intelligence, cybersecurity, and renewable energy
• Renewable Energy: Investing in renewable energy sources, such as solar and wind power, to reduce reliance on oil and combat climate change
• Healthcare: Improving access to quality healthcare services for all citizens and residents, and developing a world-class healthcare system
• Education: Enhancing the quality of education at all levels, promoting lifelong learning, and developing a skilled workforce.
• Infrastructure: Investing in transportation, logistics, and other infrastructure projects to support economic growth and improve connectivity
• Mining: Developing the mining sector to capitalize on the country’s mineral resources and create new economic opportunities.
• Financial Services: Strengthening the financial sector to support economic growth and attract foreign investment.

The overall goal is to create a more diversified, sustainable, and prosperous economy for Saudi Arabia.

16. What renewable energy projects are underway?

Saudi Arabia is actively pursuing ambitious renewable energy projects as part of its Vision 2030. Here are some notable ones:

• Dumat Al Jandal Wind Farm: This is the largest wind farm in the Middle East, with a capacity of 400 MW. It’s a significant step in diversifying Saudi Arabia’s energy mix.
• Sudair Solar Power Project: This massive solar power plant, with a capacity of 1.5 GW, is expected to be one of the largest in the world
• Al-Qurayyat Solar Power Project: This project aims to develop a 1.5 GW solar power plant, contributing significantly to the country’s renewable energy goals.
• Neom Solar Power Project: As part of the ambitious Neom development, this project will utilize cutting-edge solar technologies to power the futuristic city.
• Red Sea Project Solar Power: Sustainable tourism development in the Red Sea region will be supported by solar power plants, minimizing environmental impact
• The Solar PV Cell & Module Manufacturing Plant: This project is working to apply new solar energy technology and develop commercial-grade equipment suitable for severe heat and sandstorms.

17. How is the real estate market evolving?

The real estate sector in Saudi Arabia is currently undergoing a period of exciting transformation. Several key factors are driving this growth, including the ambitious goals outlined in Vision 2030, a thriving economy, and a rapidly urbanizing population:

• Vision 2030 is playing a pivotal role in shaping the real estate market. The government’s focus on economic diversification, tourism development, and enhancing citizens’ quality of life is creating a strong demand for various property types.
• Economic growth, fueled by rising oil prices and government investments, is further stimulating the real estate market. This economic expansion is leading to increased demand for residential, commercial, and industrial properties.
• Rapid urbanization and population growth are also significant drivers. As more people move to urban areas, the demand for housing and infrastructure development is steadily increasing.

Government initiatives are actively supporting the real estate market. These initiatives include affordable housing programs, infrastructure development projects, and regulatory reforms aimed at creating a more conducive environment for real estate investment.

Key Trends in the Saudi Arabian Real Estate Market:

• Residential Market
• Commercial Market
• Infrastructure Development
• Tourism Development

Overall, the real estate market in Saudi Arabia is poised for continued growth and development in the coming years. Vision 2030, economic growth, and supportive government policies are creating a dynamic and promising environment for the real estate sector.

18. What tech opportunities exist?

Saudi Arabia’s tech scene is experiencing rapid growth, creating a wealth of exciting opportunities. The government’s strong emphasis on technology, driven by Vision 2030, has fueled investment in key areas like Artificial Intelligence (AI), Cybersecurity, Cloud Computing, and Fintech.

• AI: The country is actively developing AI capabilities across various sectors, leading to a high demand for AI specialists, data scientists, and machine learning engineers.
• Cybersecurity: As digital infrastructure expands, the need for robust cybersecurity measures is paramount, creating a strong demand for cybersecurity professionals.
• Cloud Computing: The government’s investment in cloud infrastructure is driving the adoption of cloud technologies across industries, creating opportunities for cloud architects, engineers, and security experts.
• Fintech: The financial sector is undergoing a digital transformation, with a surge in mobile banking, Fintech startups, and digital payment solutions, opening doors for blockchain developers, Fintech analysts, and digital payment specialists.
• E-commerce and Digital Marketing: The rise of e-commerce has created a booming market for digital marketing professionals, e-commerce managers, and social media influencers.
• Renewable Energy: As the country transitions to renewable energy sources, there’s a growing demand for professionals in areas like solar and wind energy, energy storage, and smart grid management.
• Gaming and E-sports: The gaming and e-sports industry is rapidly expanding, creating opportunities for game developers, e-sports players, and professionals in the e-sports ecosystem.

These are just a few of the many tech opportunities emerging in Saudi Arabia. The country’s ambitious vision for the future, coupled with its growing economy and technological advancements, is creating a dynamic and exciting environment for tech professionals and entrepreneurs.

19. What is Saudization (Nitaqat)?

Saudization, also known as Nitaqat, is a government program designed to increase employment opportunities for Saudi nationals in the private sector. It mandates that companies hire a specific percentage of Saudi citizens within their workforce.

The program aims to reduce unemployment among Saudi citizens, develop a skilled local workforce, and support the country’s economic diversification goals. Companies that comply with Saudization requirements are often rewarded with benefits, while those that fail to meet the quotas may face penalties.

Saudization is a complex issue with various perspectives and potential impacts on both Saudi nationals and foreign workers in the country.

20. Are there visa incentives for expatriates?

Saudi Arabia has introduced several visa incentives to attract and retain skilled expatriates. One of the most significant is the Premium Residency program, often referred to as the “Saudi Green Card.” This program offers two main options:

• Permanent Premium Residency: Grants permanent residency for a one-time fee, providing long-term stability and freedom of movement within the Kingdom.
• Renewable Premium Residency: Offers renewable residency for an annual fee, providing flexibility for those who may not require permanent residency.

Key benefits of the Premium Residency program include freedom of movement, property ownership, and the right to work and invest freely without the need for a Saudi sponsor. Beyond the Premium Residency program, Saudi Arabia offers various Investor Visas to attract foreign entrepreneurs and investors, as well as Special Talent Visas designed to attract highly skilled individuals in fields like healthcare, science, culture, and sports. These visa incentives reflect Saudi Arabia’s efforts to attract global talent, foster economic growth, and diversify its economy.

Note: Visa policies and regulations are subject to change.

21. How does cultural context affect business operations?

Cultural context may influence business operations in Saudi Arabia. Here are some key aspects to consider:

• Relationships are Paramount: Building strong personal relationships is crucial for successful business dealings. This often involves taking time to get to know your counterparts on a personal level before discussing business matters.
• Hierarchy and Respect: Saudi society is hierarchical. Showing respect for elders, superiors, and religious figures is paramount. In business settings, this translates to addressing senior colleagues and clients with deference and maintaining a formal tone.
• Indirect Communication: Directness can sometimes be perceived as rude. Indirect communication is often preferred, with subtle cues and nuanced language used to convey messages.
• Patience and Deliberation: Decision-making processes can be more deliberate and take longer than in some Western cultures. Patience is key, and rushing or pressuring for quick decisions is generally discouraged.
• Religious Observances: Business operations may be affected by religious holidays and prayer times. It’s essential to be aware of these and plan accordingly.
• Gender Dynamics: While women are increasingly active in the workforce, it’s important to be mindful of gender roles and cultural norms in professional settings.

22. What is Saudi Arabia’s 2025 GDP growth forecast?

The International Monetary Fund (IMF) has recently revised its forecast for Saudi Arabia’s 2025 GDP growth upwards to 6%. This positive outlook reflects the strength of the Saudi economy and its ongoing diversification efforts under Vision 2030.

23. How stable is the economy for investors?

The Saudi Arabian economy presents a compelling investment landscape characterized by both stability and dynamic transformation.

Vision 2030, the ambitious national development plan, is driving significant economic diversification, moving the country beyond oil dependence and fostering growth in sectors like tourism, entertainment, and technology.
The government actively supports a business-friendly environment through initiatives such as improved ease of doing business, streamlined regulations, and infrastructure development. Furthermore, Saudi Arabia boasts a sizable domestic market, offering substantial opportunities for businesses across various sectors.

The Public Investment Fund (PIF), a major player in the global economy, plays a crucial role in driving economic growth within the Kingdom through strategic investments. While challenges such as geopolitical risks and the inherent volatility of oil prices persist, the Saudi Arabian economy offers significant potential for investors who are willing to navigate the complexities of the market and capitalize on the ongoing economic diversification and growth.

24. What are the risks of investing in Saudi Arabia?

While Saudi Arabia presents significant investment opportunities, it’s important to acknowledge the inherent risks. These include the volatility of oil prices, which can significantly impact the economy, as well as geopolitical uncertainties that may create instability and erode investor confidence. The success of Vision 2030’s economic diversification efforts remains to be fully realized, and over-reliance on oil revenues continues to pose a risk. Furthermore, the evolving regulatory landscape and the complexities of navigating the local business and social environment require careful consideration.

25. How are intellectual property rights protected?

Saudi Arabia has made strides in protecting intellectual property rights. The country has established a robust legal framework that covers patents, trademarks, copyrights, and trade secrets, aligning with international standards. The Saudi Authority for Intellectual Property (SAIP) plays a crucial role in administering and enforcing these rights. While challenges remain, such as awareness and enforcement, the government is actively working to enhance the IP ecosystem and foster innovation.

26. What is the Anti-Concealment Law?

The Anti-Concealment Law in Saudi Arabia aims to combat illegal business practices, primarily focusing on situations where a Saudi national allows a non-Saudi individual to engage in economic activities without the proper licenses or approvals. This includes instances where a Saudi citizen allows a foreigner to use their name, license, or commercial registration for business purposes. The law aims to ensure that economic activities within the Kingdom are conducted legally and transparently, promoting fair competition and protecting the interests of both Saudi nationals and the government. Violations of the Anti-Concealment Law can result in severe penalties, including imprisonment, substantial fines, and the confiscation of assets.

27. Are there incentives for SMEs?

The Saudi Arabian government offers a range of incentives to support the growth and development of Small and Medium Enterprises (SMEs). These incentives are designed to foster entrepreneurship, encourage innovation, and contribute to the overall economic diversification goals outlined in Vision 2030.

Some of the key incentives for SMEs in Saudi Arabia include:

• Financial Support: This includes access to government-backed loans, grants, and equity investments. Programs like the Monsha’at initiative provide funding opportunities and support services for SMEs.
• Tax Incentives: These can include reduced tax rates, tax exemptions, and simplified tax procedures for qualifying SMEs.
• Regulatory Support: The government has implemented measures to streamline regulations and reduce bureaucratic hurdles for SMEs, making it easier to start and operate a business.
• Infrastructure and Facilities: Access to affordable and high-quality infrastructure, such as industrial parks, technology hubs, and co-working spaces, is crucial for SME growth.
• Training and Development: The government provides training programs and workshops to enhance the skills and knowledge of entrepreneurs and SME owners.

These incentives aim to create a supportive environment for SMEs to thrive and contribute significantly to the Saudi Arabian economy.

28. How does Saudi Arabia handle bankruptcy?

The Saudi Arabian Bankruptcy Law, enacted in 2018, aims to provide a legal framework for rescuing insolvent businesses through restructuring and financial rehabilitation rather than solely focusing on liquidation. This modern legislation emphasizes preserving viable businesses, protecting creditors’ rights, and fostering a more sustainable business environment.

Key features of the law include provisions for financial restructuring, such as debt restructuring agreements and protective settlements, alongside mechanisms for orderly liquidation when necessary. The law aims to strike a balance between safeguarding the interests of debtors and creditors, promoting economic stability, and encouraging entrepreneurship within the Kingdom.

29. What role does the Public Investment Fund (PIF) play?

The Public Investment Fund (PIF) serves as the linchpin of Saudi Arabia’s economic transformation, playing a crucial role in achieving the ambitious goals outlined in Vision 2030. As the Kingdom’s sovereign wealth fund, PIF strategically invests in a diverse range of sectors, both domestically and internationally, to diversify the economy beyond oil dependence. By funding key projects in infrastructure, technology, tourism, and other promising sectors, PIF drives job creation, fosters innovation, and enhances the Kingdom’s global competitiveness. Its investments in mega-projects like NEOM and the Red Sea Project exemplify PIF’s commitment to developing world-class infrastructure and creating new economic opportunities. Moreover, PIF’s international investments contribute to strengthening Saudi Arabia’s global economic influence and expanding its investment portfolio.

30. How can investors stay updated on regulatory changes?

Staying informed about regulatory changes in Saudi Arabia is crucial for investors. This can be achieved through a multi-faceted approach. Regularly monitoring official government websites and publications of relevant ministries, such as the Ministry of Investment and the Saudi Central Bank (SAMA), is essential. Subscribing to industry-specific newsletters and engaging with professional networks and industry associations can provide valuable insights and updates. By actively seeking and analyzing information from various sources, investors can stay abreast of regulatory developments and navigate the evolving business landscape in Saudi Arabia effectively.

If you are local or foreign investors looking to take advantage of the promising opportunities offered by the updated Saudi Investment Law, our specialized legal team is ready to provide comprehensive legal consultations to ensure your full compliance with the law and maximize your business benefits from the available incentives.
📞 Don’t hesitate to contact us for exceptional professional consultation that guarantees the success of your investments in the Kingdom!
Walid Othman Head of Investment & Transactions Department 📧 [email protected]
Mahitab AgelanAssociate Lawyer📧 [email protected]