Saudi Arabia

Based on the practical experience of specialists of the Prikhodko and Partners Law Firm, we can conclude that Saudi Arabia is becoming an increasingly attractive jurisdiction for doing business, including for citizens of Ukraine.

In particular, this is due to economic reforms in the country and simplified business procedures for foreign investors.

In this article, we will look at the main aspects related to company registration, residency requirements, opening a bank account, and the general tax system for legal entities.

Features of company registration

The process of registering a company in Saudi Arabia has become much easier thanks to the reforms introduced as part of the 2030 vision.

It should be noted that the main steps for company registration include:

1. Choice of company type: As in Ukraine, the most common forms in Saudi Arabia are LLC (limited liability company) and joint stock company.
2. Company name registration: This process is different from the process in Ukraine – it is necessary to submit an application for approval of the company name to the Ministry of Trade and Investment.
3. Preparation of constituent documents: Includes the preparation of the company charter and other necessary documents depending on the number and residence of the founders.
4. Obtaining a business license: Depending on the type of activity, a special license may be required, so the future operation should be discussed with specialists in advance to understand all the possible necessary steps for a successful start of the activity.
5. Contribution of capital: different legal forms of a legal entity require different amounts of authorized capital; on average it is necessary to focus on 500,000 Saudi Riyals.

Residency requirements for doing business

Foreign investors can own companies in Saudi Arabia, but they must meet certain requirements:

• Local partner: In some sectors, a local partner who owns a share in the company may be required, such share must be determined separately and agreed upon before the actual registration of the business.
• License from the Saudi Arabian General Investment Authority (SAGIA): Generally, foreign investors must obtain an investment license from SAGIA.
• Residence: The director of the company can be a foreigner, but it is necessary to obtain a residence visa or the right to work for the relevant citizen.

Opening a bank account

The procedure for opening a bank account in Saudi Arabia can be divided into the following stages according to the practical aspects of our specialists’ activities:

1. Bank selection: Saudi Arabia has many international and local banks, such as Al Rajhi Bank, National Commercial Bank, and Saudi British Bank, in interaction with each individual bank, the specialists of the Law Firm “Prikhodko and Partners” will orient you in advance at the stage of developing a business model.
2. Submission of documents: In order to open an account, it is necessary to provide the founding documents of the company, a business license (if available), documents confirming the identity of the directors and founders, as well as documents confirming the right to work for the latter.
3. Audit: The Bank will check compliance with anti-money laundering requirements and other regulatory acts, as well as the business reputation of the relevant persons.
4. Account opening: After successful verification, the bank will open an account for the company within three working days of the banking system.

General tax system for legal entities

Saudi Arabia has a competitive corporate tax system, which we covered in more detail in our other article on the characteristics of the tax system in Saudi Arabia, but special attention should be paid to the following indicators:

• Corporate tax: The corporate tax rate can vary from 20% to 45% depending on the amount of profit and the number of residents among the founders, however, for local companies where the majority of shareholders are Saudis, there is no corporate tax, instead zakat (religious tax) is paid.
• Value Added Tax (VAT): The standard VAT rate is 15%.
• Real estate income tax: There is a 5% income tax for real estate transactions.
• Other taxes: There are also other duties and fees, such as social security contributions for employees of a particular business.

Conclusion:

Based on the trend to date, Saudi Arabia continues to work on creating a favorable business environment by attracting foreign investment and simplifying regulatory procedures.

This makes the country attractive for entrepreneurs looking for new opportunities to develop and scale their business.