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Saudi Arabia has gained considerable momentum as one of the hottest hubs for entrepreneurship, but actually securing the first riyal in your pocket can be a long ordeal for foreign entrepreneurs, and one that is usually not achieved. This can take several months, or even a year in some cases.
In fact, even if you are lucky enough to work with a good partner, it can take more than three months to incorporate and legally enter the country. Not only is the process expensive and time-consuming, but many of the details surrounding foreign investment regimes on the oil-rich peninsula remain shrouded in obscurity.
This article, as part of the Saudi expansion series, aims to shed light on the “big rocks” of the foreign investment mechanism in the Kingdom, with a main focus on their concrete benefits and main features. In the future, Tawarev plans to release more articles detailing the cost factors and end-to-end process of landing in Saudi Arabia.
Advantages of investing in Saudi Arabia
To be honest, Saudi Arabia’s traditional advantages have already been talked about: economic and monetary stability, strategic location, and vibrant business environment. This section describes specific programs and opportunities that entrepreneurs can directly benefit from.
Regional Headquarters (RHQ) Program:
Multinational companies establishing a regional presence in Saudi Arabia enjoy multiple benefits, including:
- Withholding tax and corporate income tax exemption for up to 30 years
- 10 years of saudiization exemption
- Premium Residency for Executives
- Unlimited employee work permits
This is subject to certain requirements to prove a functioning headquarters, such as the residence of the Regional Head, number of employees, and percentage of revenue.
Technology Entrepreneurship License
Targeted specifically at startups, technology entrepreneurs can get a low-cost route to Saudi Arabia. Under this license, the R60,000 annual fee that all investors must pay will be waived for his five years.
Since Tawarev specializes in Saudi Landing for Entrepreneurs, we will explain more about how to obtain this license and its various benefits in a future article.
Access to real estate
Under a foreign investment license, entrepreneurs can purchase real estate for corporate purposes. With EXPO 2030 and the 2034 FIFA World Cup just around the corner, real estate is expected to boom over the next decade. Therefore, even foreign investors in the textile business can indirectly benefit from the rising real estate market and can reap huge profits in the long run.
government incentives
Saudi Arabia, like any other market, has certain sectors growing much faster than others. Participating in one of the 11 programs on the roadmap, including healthcare transformation, housing and quality of life (hospitality and tourism), will give you access to well-funded and untapped markets. It will be. We offer great government incentives.
For example, let’s say you want to build a hotel in Saudi Arabia. There is a Tourism Development Fund that can finance up to 20-30 percent of the total capital investment. Made in Saudi is another visibility initiative supporting local Saudi businesses. Through this program, companies can obtain credit lines for international exports and free access to sponsored global exhibitions to showcase their products. These are just two examples. Every second major government agency offers such incentive programs tailored to provide relevant industry companies with the resources they need to expand.
For entrepreneurs and business owners interested in visiting Saudi Arabia, it is of utmost importance to consider Vision 2030 and the “rich” incentives it offers. In this series, Tawarev will publish specific articles about each program, providing a more in-depth look at the many benefits that are all within reach.
Main features of Saudi Arabia’s foreign investment regime
All companies in Saudi Arabia operate under a single jurisdiction and the same laws and regulations apply to all regions of the country. This applies to both Saudi and non-Saudi residents, but there are minimal operational and legal differences in implementation based on context. This is in stark contrast to his neighboring GCC countries, where businesses are offered multiple jurisdictional options even within the same city.
Under a single jurisdiction system, there is only one point of contact for compliance, which provides legal certainty for all businesses. With the same company registration, you can operate your business anywhere in the country with no state-based preferences. The same fees, Saudization quota or Iqama costs apply. There are no differences in government procurement, taxes, employment or residence. In effect, you can work in Jeddah, live in Riyadh and be employed in Madinah.
- permission and prohibition
Most sectors that were historically prohibited are now eligible for foreign investment. The only major prohibited areas are oil and gas exploration, military and security-related activities, real estate development in Mecca and Madinah, guidance services for the Hajj, and certain recruitment services.
Additionally, women-led businesses are a very real possibility. Women can now own a business without the need for the presence or involvement of a mahram (male guardian).
Few businesses in Saudi Arabia require large capital requirements, with the exception of real estate development, which requires R30 million. This used to apply to any type of company, but now you can even see startups succeeding with as little as R10,000. Technology startups (via Entrepreneurship License) have minimum capital requirements, allowing you to start a company with virtually nothing in your pocket.
- Legal structures allowed in Saudi Arabia
Foreign investors are also not allowed to set up companies in their own names, with some exceptions such as high-tech entrepreneurs and high-class residents. Instead, a company must be a branch of its active parent business. To qualify, a company must have been operating in its home country for at least one year (previously it was three years). It is highly desirable that this company generates positive cash flow.
Foreign investors can set up most types of businesses in Saudi Arabia. The most common are LLC (limited liability company) and JSC (stock company).
Stay tuned for the next episode as we navigate our way to the Saudi market
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