Company registration in Mainland Saudi Arabia

Mainland vs. SEZ in Saudi Arabia: Key Differences

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Foreign Ownership

• Mainland: Up to 75% for LLCs; 100% only for certain sectors under a MISA license
• SEZ: 100% ownership allowed

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Taxes

• Mainland: Standard rates: Corporate tax 20%, VAT 15%
• SEZ: Benefits: 0–5% corporate tax, customs duties waived, 0% VAT on exports

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Capital

• Mainland: Higher (e.g., from 500,000 SAR for LLCs)
• SEZ: Lower or no minimum capital requirement

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Bureaucratic Complexity

• Mainland: Process is more complex and takes longer (2–6 months)
• SEZ: Simpler process (3–6 months)

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Localization (Saudization)

• Mainland: Saudization hiring requirements (e.g., quotas for local citizens)
• SEZ: Some SEZs offer Saudization benefits. No requirement to hire Saudis in the first 5 years; 15% Saudis required from years 6–10.

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Standard Customs Duties

• Mainland: Standard customs duties apply
• SEZ: Duty-free import/export for SEZ businesses

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Activities

• Mainland: Broader scope, but restrictions exist for foreign investors
• SEZ: Limited to approved sectors (manufacturing, logistics, cloud computing)

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"Registering a Mainland company in Saudi Arabia is ideal for businesses aiming for long-term presence in the region. Despite higher costs and complexities, it grants access to key markets and government projects." Alexandra Kurdiumova Co-founder & Senior Partner

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Registration Procedure

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On average, the process of setting up a legal entity on the Saudi mainland takes 1–3 months. Registration and ongoing compliance involve higher costs compared to SEZs and may include bureaucratic delays, especially in complex sectors.

1. Obtaining a MISA License (Remote) The MISA investment license allows foreign investors to own shares in a company and conduct business in Saudi Arabia. The process includes submitting an online application, document verification, and approval.
2. Reserving a Company Name (Remote) Reservation of a unique company name via the Ministry of Commerce. The name must meet local naming regulations.
3. Legalizing Articles of Association and Memorandum of Association (MoA) (Remote) Approval and notarization of the Articles of Association and Memorandum of Association.
4. Completing Commercial Registration (Remote) Final company registration with the Ministry of Commerce to obtain a commercial license, granting legal entity status and commercial activity rights.
5. Registration with the Chamber of Commerce (Remote) Mandatory for membership and access to commercial opportunities.
6. Obtaining the Company Seal and registration with the Ministry of Labor (Remote) Required for hiring employees and complying with the Saudization (Nitaqat) program.
7. Registration with the General Organization for Social Insurance (GOSI) (Remote) Needed for managing employee social contributions and Nitaqat compliance.
8. Registration of the National Address (Remote) Required for receiving official notifications and legal correspondence.
9. CEO Visa and Residence Permit via the Ministry of Labor and MISA (In Person) The CEO must be physically present in Saudi Arabia for a medical checkup.
10. Registration Can be done remotely with the Zakat, Tax & Customs Authority
11. Opening a Corporate Bank Account Remote or in person, depending on the bank

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Consequences of Mainland Registration

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Tax Obligations

• Annual and quarterly tax return submissions
• VAT compliance (recordkeeping and refunds)

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Labor Law Compliance

• Saudization quota: 5–30% depending on company size

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Reporting Requirements

• Financial audit required for LLCs with turnover exceeding 1 million SAR