In light of the rapid economic reforms and Saudi Vision 2030, the Kingdom of Saudi Arabia has become a highly attractive investment destination at both the regional and global levels. Investment opportunities are no longer limited to local investors; the doors have been widely opened for foreign investors to enter various promising sectors, with regulatory facilitations, economic incentives, and a modern legal framework that supports transparency and sustainability.

This guide provides foreign investors with everything they need to know to launch a successful project in Saudi Arabia—from legal requirements and incentives to permitted activities and key legal recommendations to ensure that their business remains fully compliant.

 

Conditions for Establishing a Company in Saudi Arabia for Foreigners

The Saudi Ministry of Investment (MISA), based on the provisions of the law and its implementing regulations, has set a number of conditions that must be met in order to establish a foreign-owned company in the Kingdom, including:

1. Obtaining an investment license: The license is granted after verifying the investor’s eligibility and business activity, along with the submission of a detailed business plan.
2. Determining the legal form of the company, such as a limited liability company, a joint stock company, or a branch of a foreign company, in accordance with the Saudi Companies Law.
3. Compliance with Saudi regulations, particularly the Labor Law, Commercial Law, Tax Law, and Anti-Money Laundering Law.
4. Registration in the Commercial Register: After the license is issued, the foreign company must register with the Ministry of Commerce and complete all registration requirements.
5. Providing adequate capital: The minimum capital varies depending on the type of activity and is determined by the implementing regulations or by decisions of the relevant regulatory authorities.
6. Engaging a licensed certified public accountant: To ensure compliance with accounting and tax requirements.
7. Obtaining additional permits for certain sectors (such as banking, healthcare, and media).
8. Refraining from engaging in prohibited activities listed in the Ministry of Investment’s negative list.

For certain activities, the Ministry requires the presence of a Saudi partner with a specific ownership percentage (Saudization requirements), while 100% foreign ownership is permitted in most sectors, particularly industrial, services, and technology sectors.

 

The Saudi Investment Authority – Ministry of Investment and Its Regulatory Role

The Saudi Ministry of Investment (MISA) is the official authority responsible for regulating, developing, and overseeing the foreign investment environment in the Kingdom. Under the law, it has been assigned a number of key responsibilities, including:

• Issuing investment licenses to foreign investors after reviewing their applications.
• Monitoring legal compliance of foreign companies operating within the Kingdom.
• Proposing policies and legislation that enhance the competitiveness of the Saudi market.
• Overseeing the “Invest Saudi” initiatives, which aim to globally promote investment opportunities in the Kingdom.
• Facilitating government procedures in coordination with relevant authorities such as the Ministry of Commerce, the Ministry of Human Resources, and the Zakat, Tax and Customs Authority.

Through its digital platform (investsaudi.sa), the Ministry offers a package of services to foreign investors, including online application submission, electronic follow-up, and connecting investors with government entities that support investment projects.

 

Investment Incentives in Saudi Arabia

The Kingdom exerts significant efforts to provide a competitive investment environment regionally and internationally through an integrated set of legal and regulatory incentives designed to attract high-quality foreign investments, including:

• Tax and customs exemptions in certain special economic zones.
• Support for training and employment costs, in cooperation with the Human Resources Development Fund.
• Access to concessional financing through programs offered by the Saudi Industrial Development Fund and the Saudi Exim Bank.
• Facilitated incorporation procedures via the single-window services at the Ministry of Investment.

The Kingdom also allows foreign companies to compete for government contracts on the basis of “reciprocal treatment,” provided that all legal and regulatory conditions are met.

 

Activities Permitted for Foreign Investors in Saudi Arabia

Under the updated Investment Law, foreign investors are permitted to engage in most economic activities, with the exception of a limited list of restricted activities that the Ministry of Investment publishes periodically in coordination with the Council of Economic and Development Affairs.

Permitted activities include:

• Industrial sector: such as food, chemical, and pharmaceutical industries.
• Services sector: including consulting services, information technology, and logistics.
• Commercial sector: wholesale and retail trade, including e-commerce.
• Tourism sector: hotel operations, events, and destination management.
• Private education and training sector.

 

What Is the Minimum Amount Required for Foreign Investment in Saudi Arabia?

The updated Investment Law does not stipulate a fixed minimum capital amount for foreign investment. However, the Implementing Regulations of the Investment Law provide that the Ministry of Investment has the authority to set minimum capital requirements based on the chosen economic activity.

Nevertheless, the Ministry clarifies on its official platform that:

• Services activities: generally do not require high capital, and in some fields the minimum may start from around SAR 500,000.
• Industrial activities: may require capital of no less than SAR 1,000,000, particularly where the project benefits from government support.
• Joint activities with Saudi partners: in some sectors, lower capital requirements may be allowed where a national partner is involved.

The Ministry emphasizes that the financial feasibility study and the business plan are more influential factors than the nominal capital amount, as they demonstrate the sustainability and economic viability of the project.

 
In conclusion, Saudi Arabia is currently one of the most attractive Arab countries for foreign investment, thanks to its transparent and supportive legal framework and the economic incentives granted under a clear national strategic vision.

In light of the above, we recommend that international companies and foreign investors seeking to enter the Saudi market should:

1. Develop a precise understanding of the Saudi legal environment and avoid relying on foreign assumptions that may not apply in the Kingdom.
2. Choose the most appropriate legal entity based on the nature of the activity and the size of the capital.
3. Consult licensed Saudi lawyers before signing any contracts or establishing a commercial entity.
4. Follow ongoing regulatory updates, particularly in the Companies Law, Investment Law, and tax regulations.
5. Build strategic local partnerships to enhance opportunities for expansion and regulatory compliance.

At “Sareeh – Lawyers and Legal Consultants”, we support you step by step in understanding the regulatory environment, choosing the optimal legal structure, and establishing your company safely and in full compliance with Saudi law.

 

Frequently Asked Questions

1. Can a foreigner establish a company without a Saudi partner?

Yes. Under the new Investment Law, it is possible to establish a company that is 100% foreign-owned in most sectors, except for restricted activities.

2. What is the difference between an investment license and a commercial registration?

The investment license is issued by the Ministry of Investment and authorizes the practice of the activity, while the commercial registration is issued by the Ministry of Commerce and constitutes the formal legal registration of the company.

3. Are taxes imposed on foreign investors in the Kingdom?

Yes. Foreign investors are subject to income tax at a rate of 20% on net profits and must be registered with the Zakat, Tax and Customs Authority.

4. Can profits be transferred outside the Kingdom?

Yes. The Investment Law permits the free transfer of profits and capital outside the Kingdom, subject to compliance with tax and legal requirements.

5. Are there restrictions on property ownership by foreign investors?

Foreign investors may own real estate that is directly related to their commercial activity, subject to approval by the competent authorities. Ownership for purely non-commercial or residential purposes is generally not permitted.