Starting a business in Saudi Arabia

Starting a business in Saudi Arabia


Saudi Arabia just became one of the fastest business climate improvers, according to the annual World Bank`s group report – Doing business Report 2020. The reforms ongoing in the country, both at the business and the social levels are favourable for the investors to come.

To attract investments and to ease the environment for business is, indeed, the main pillar of Vision 2030 – the Crown Prince`s ambitious plan to diversify the economy of the Kingdom from its oil dependence.     

The economy of Saudi Arabia

While the petrochemical industry, followed by construction, are traditionally the primary profitable sources for the country, new spheres are developing. Following the boost of tourism and entertainment since September 2019, the Kingdom is welcoming visitors, issuing tourists visas for the first time and removing archaic public regulations. Businesses in fields like events, advertisement and tour operators are busier than ever. 

Good to know:

In 2019, 1,131 new international companies, have been set up in Saudi Arabia, according to the Investment Highlights Winter 2020 report.

Reforms in Saudi Arabia

It has been recently announced that business projects related to renewable energy will receive loans as support through the government program Mutjadeda.

Positive reforms have been made for minor investors, ranking the Kingdom third globally on this indicator, along with New Zealand and Singapore – the two easiest place in the world for doing business.

To tackle the high unemployment rate among the youth, Saudi Arabia is supporting companies and individuals of both local and foreign origin through a well established entrepreneurial ecosystem.

Women, who have been deprived of many opportunities so far, now enjoy equal rights to men in terms of opening bank accounts, setting up companies, operating financially, etc.

Procedures relating to starting a business in Saudi Arabia

Foreigners wishing to set up a business in Saudi Arabia are quite likely to be supported by related authorities provided they comply with existing regulations Unlike before, companies without a local partner can now obtain a licence for doing business in Saudi Arabia and to have 100 % of the ownership. First and foremost, after reserving a company name, a licence from the Saudi Arabian General Investment Authority (SAGIA) is needed. There are minimum capital requirements to be covered, depending on the type of the company. For instance – SAR 100 000 for a general trading company.

SAGIA recognises the following type of companies:

  • Limited liability company 
  • Limited liability One person – company
  • Joint-stock company
  • Foreign company branch 

Find out more about the procedures and taxes in the updated investment manual issued by the SAGIA. The Saudi Arabian General Investment Authority has managed to turn the country into an ideal destination for business and entrepreneurship thanks to simplified measures and many associated benefits such as the lowest average corporate tax rate in the Middle East and North Africa (MENA). For more information about the next step of the process, you can check the E-Services of SAGIA.

Labour conditions in Saudi Arabia

The minimum wage for expats in Saudi Arabia is  2,500 riyals, while for Saudi nationals, it is 5,300 riyals. Given the ongoing Saudisation process, employers are obliged to hire locals – the number depending on the business category.

The legal working week in Saudi Arabia consists of 48 hours, that is 8 hours a day for 5 days – from Sunday to Thursday, even though some businesses are starting on Saturday, with only one day off, or operating 6 hours daily. All business units, as well as the public sector and governmental bodies, etc., have to comply with the five times daily prayer breaks. Since January 2020, any business can work 24/7 in return of an annual tax. However, that does not concern the prayer time, yet. 

During the Ramadan month, employees are expected at their workplace for only 6 hours a day. These do not include their lunch, rest and prayer times.