Requirements for obtaining a commercial registration for non-Saudis: Investor's Guide

What are the requirements for obtaining a commercial registration for non-Saudis? Given that Saudi Arabia is among the attractive investment destinations for many entrepreneurs and investors from around the world, and with the increasing interest in opportunities available in the Saudi market, many non-Saudi investors are raising fundamental questions about the possibility of establishing their own businesses in the Kingdom.

The most prominent question that comes to mind is: Are non-Saudis entitled to obtain a commercial registration in Saudi Arabia? The answer is yes, but within a specific framework of controls and procedures that ensure the regulation of foreign investment and its direction towards priority development sectors.

This article aims to provide a comprehensive and detailed explanation of the requirements for obtaining a commercial registration for non-Saudis, highlighting all aspects related to this process, clarifying the steps and costs involved, and emphasizing the importance of seeking specialized legal expertise to ensure smooth procedures and avoid any potential obstacles.

Remember that a thorough understanding of these terms and procedures is key to the success of any foreign investment in the Kingdom, and ensures that the non-Saudi investor can confidently embark on his business journey.

 Abdulaziz bin Yasser Al-Anzi Law Firm

Privileges and incentives guaranteed by the Saudi system to foreign investors

Foreign investors in Saudi Arabia enjoy a range of advantages and incentives designed to make the investment environment attractive and safe, most notably receiving the same incentives and guarantees as Saudi investors, and ensuring fair and equal competitive treatment.

The system also guarantees the foreign investor the freedom to transfer his profits and share of capital outside the Kingdom without obstacles, as well as the possibility of owning the real estate necessary for the purposes of his business activity and housing his workers, and residency facilities where the investor can sponsor himself and the non-Saudi workers in his project.

The Kingdom also supports its investors by providing access to the competitive advantages offered by its network of international agreements to encourage and protect investment, and by providing access to subsidized financing programs. The investor also enjoys administrative flexibility that allows him to transfer shares between partners after obtaining the required regulatory approvals.

Is it permissible for a non-Saudi to obtain a commercial registration in Saudi Arabia?

Yes, non-Saudis are entitled to obtain a commercial registration in the Kingdom of Saudi Arabia and practice various commercial activities. This indicates the great development in the local business environment, which comes within the framework of the Kingdom’s Vision 2030, which aims to diversify the economy and attract foreign direct investments.

The ownership of commercial registration by non-Saudis in the Kingdom also aims to reduce dependence on oil by developing new economic sectors, benefiting from advanced global expertise in various fields, generating new jobs for Saudi citizens within the projects resulting from these investments, and raising the quality of services and products in the local market through diversifying offerings and increasing competition.

Requirements for obtaining a commercial registration for non-Saudis

It is crucial to know and adhere to the requirements for obtaining a commercial registration for non-Saudis, as this is a fundamental step to ensure the success of the establishment process. The following are the most prominent of these basic requirements:

1. The foreign investor must have a valid residency permit and an investment or work visa that allows him to invest in the Kingdom.
2. Submit an application to the Ministry of Investment, along with a feasibility study for the project, to obtain an activity license.
3. Establishing a company with an approved legal entity, operating in a field permitted for foreigners, while adhering to the conditions for having a Saudi partner in the stipulated sectors.
4. Meeting the minimum capital requirement for the type of activity, and depositing it in a Saudi commercial bank account opened for this purpose.
5. Prepare the essential documents, which include a passport, a clean criminal record, a business plan, and a notarized company incorporation contract.
6. Register with the Zakat, Tax and Customs Authority, obtain municipal or private licenses if necessary, and comply with social security regulations.

Economic activities prohibited for foreign investment in the Kingdom of Saudi Arabia

Saudi regulations have defined the scope of economic activities permitted for foreign investors, and restricted the practice of a set of strategic and vital activities to national entities, with the aim of protecting the supreme interests of the state. The excluded economic activities can be explained as follows:

First: Activities excluded for security and strategic reasons

This includes oil and gas exploration and production activities, manufacturing of military and security equipment and explosives, as well as insurance activities related to the military and security sectors.

Second: Activities related to sovereignty and religious and cultural heritage

An example of this is real estate investment within the boundaries of Mecca and Medina, and direct services related to Hajj and Umrah rituals in the tourism sector.

Third: Activities subject to intensive government regulation

These include transportation services of all basic types (land, air and space) and the basic services sector, including education, communications and specialized health services.

This section also includes media and cultural activities, such as printing, publishing, and audiovisual activities. The explanation is that these sectors should be centrally regulated to maintain community security, cultural identity, and national sovereignty, and to ensure that these vital services are provided in accordance with national standards and policies set by the competent authorities.

Steps to obtain a commercial registration for non-Saudis

The most important steps for obtaining a commercial registration for non-Saudis are as follows:

1. Prepare the required documents and papers, verifying their authenticity and validity, with the aim of expediting procedures and preventing any obstruction or delay in their processing.
2. Conduct a detailed study of the Saudi market to identify available opportunities and potential obstacles, and prepare an accurate economic feasibility study to assess the commercial viability of the project.
3. Applying through official electronic platforms is a service provided with the aim of saving time and effort and completing the required procedures without the need to visit government agencies.
4. Waiting until the application is reviewed by the relevant authorities, as the time period depends on the nature of the business activity and the readiness of the submitted documents.
5. Obtaining the required professional permits for certain business activities that require them, such as the Communications and Information Technology Commission, or the Ministry of Health.
6. Obtaining additional licenses from the local municipality is required for business activities that need physical locations such as shops, or those that involve industrial and manufacturing operations.

You can carry out most of the registration procedures through official electronic channels, whether through the Ministry of Commerce platform or through the Saudi Business Center, where the duration of obtaining a commercial registration for non-Saudis ranges from several working days to a few weeks, depending on the nature of the registered activity and its need to obtain additional approvals from the competent authorities.

Cost of obtaining a commercial registration for non-Saudis

One of the conditions for obtaining a commercial registration for non-Saudis is the obligation to pay certain fees that vary according to the type of activity and the legal form of the company. You can obtain accurate information about the required costs from the relevant official authorities, and they can be summarized as follows:

Basic fees

The annual fees for the main registration are approximately 200 Saudi Riyals, in addition to the Chamber of Commerce membership fees which vary according to the activity. If branch registrations are requested, fees are added for each registration, and you can pay these fees electronically through the Ministry of Commerce portal.

Additional costs

There are also additional costs required, the most important of which are:

1. The costs of translating foreign documents into Arabic through a certified translator vary depending on the size of the document.
2. The costs of special licenses required for certain activities, such as medical or engineering activities, are often higher than the regular registration fees.
3. Capital requirements, which must be deposited in a Saudi bank account.
4. The costs associated with registration with the Zakat, Tax and Customs Authority, and the associated costs of accounting or legal consultations.
5. The annual renewal fee is similar to the initial issuance fee, in addition to the Chamber of Commerce fees.

Before you begin the process of opening a commercial register: Important tips for foreign investors

If you want your investment journey in Saudi Arabia to be fruitful and smooth, it is essential to be well-informed about the regulations and laws in place in this field. You can also rely on a set of important tips provided by experts and specialists:

1. Check that the business activity for which you wish to open a commercial register is on the list of permitted activities.
2. Contracting with specialized legal experts to obtain their guidance and instructions on the legal requirements that must be implemented to open a commercial register.
3. Good planning of the available budget and its compatibility with all the costs required to open the business and start operating the project, taking into account any additional costs that may arise in the future.
4. Make sure that all documents and paperwork submitted are correct, complete and valid to avoid rejection or delay of your application and thus hindering your investment plans.
5. Take advantage of the electronic services provided by the official website of the Ministry of Commerce, through which you can accomplish many tasks without visiting government agencies.
6. Getting acquainted with the local business culture and business practices in Saudi Arabia to build successful business relationships and adapt to the business environment.
7. Looking for a location that complies with municipal regulations and effectively serves the target audience.

The role of the lawyer in obtaining a commercial registration for non-Saudis

 Abdulaziz bin Yasser Al-Anzi Law Firm

The lawyer has a major role in the process of obtaining a commercial registration for non-Saudis, as his knowledge and professional expertise helps him to ensure that their procedures proceed accurately and smoothly within the approved legal framework.

As a foreign investor, you can rely on the lawyer’s legal expertise during the planning stage, by obtaining appropriate legal advice on activities permitted for foreigners, and determining the optimal legal form for the entity, whether it is a joint-stock company, a limited liability company, or something similar, based on the nature of the project and your investment goals.

The lawyer also has an important role in the preparation and procedures phase, as he guides you through the precise steps that help you prepare the required documents, obtain their certified translation, prepare the articles of incorporation and company regulations, and officially represents you before various government agencies, including the Ministry of Investment, the Ministry of Commerce and other specialized bodies, which saves you a lot of time and effort, and ensures that applications are submitted correctly.

Then he reviews all the legally required obligations such as tax regulations, labor regulations and social security, thus helping you avoid any future risks or violations, ensuring that your project is launched on a sound legal basis, and giving you the opportunity to focus on developing your business in the promising Saudi market.

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