Saudi Arabia, officially the Kingdom of Saudi Arabia, is a country in Western Asia. It spans the vast majority of the Arabian Peninsula, with a land area of approximately 2,150,000 km². Saudi Arabia is the largest country in the Middle East, and the second-largest country in the Arab world

Saudi Arabia is considered both a regional and middle power. The Saudi economy is the largest in the Middle East and the nineteenth-largest in the world. Saudi Arabia also has one of the world's youngest populations, with approximately 50 percent of its population of 34.2 million being under 25 years old. In addition to being a member of the Gulf Cooperation Council, Saudi Arabia is an active and founding member of the United Nations, Organization of Islamic Cooperation, Arab League, and OPEC.

Let discuss in detail process of company registration Saudi Arabia for foreigner step by step: Saudi Arab has dependably been in the focal point of each trading action in the Middle East. While it has remained a heavenly place for Muslim journeys, the nation has seen a considerable measure of development monetarily and the government is continually attempting to improve it to make it a suitable place for foreign investors. Starting from 2017, the legislature of Saudi Arabia has gone ahead to make foreign investments in the nation considerably less complex. The whole enlistment procedure of a foreign organization in Saudi Arabia also now requires less time to complete. The minimum capital required to fund a start-up in this nation has additionally been diminished.

Types of companies in Saudi Arabia

The establishment option in Saudi Arabia is similar to a sole proprietorship in other regions. Only one owner is necessary for this type of establishment. This entity can only be registered by a Saudi or GCC national. Sole proprietors are personally responsible for any debts the business accrues.

-Limited liability company

Limited liability companies are some of the most common business entities and forms of investment for foreign businesses in Saudi Arabia. Only one director and one shareholder are required to set up this type of entity. There is no board of directors that is required, but many businesses decide to establish a board and integrate this requirement into their Memorandum of Association. If the company has more than 20 partners, the company is required to set up a Board of Controllers. Shareholders may be natural persons or other businesses. An auditor must also be appointed.

There is no limitation on the percentage of foreign ownership for this type of entity. However, many investors use LLCs to establish joint ventures with Saudi partners.

These companies can engage in the activities which are described under the approved objectives of the business. They can participate in public or private sector jobs. LLC can sponsor employees for residency purposes.

The paid-up share capital requirement for this type of entity is SAR 100,000. Shareholders are liable for the debts of the company up to the amount of the value of their shares in the company.

Registering an LLC in Saudi Arabia is more complicated and time-consuming because you must obtain a foreign capital investment license from the Saudi Arabian General Investment Authority, which is often expensive.

-Joint-stock company

The Saudi Arabia joint-stock company must consist of at least two shareholders and three directors who need not be Saudi residents. An auditor must also be appointed for the company, who is responsible for submitting financial reports each year.

The minimum share capital to establish a joint-stock company in Saudi Arabia is SAR 500,000. The Ministry of Commerce and Industry can allow for this capital to be made in stages.

-Limited partnership

A limited partnership in Saudi Arabia requires a minimum of one director and two partners or any nationality and residency. There must be at least one managing partner and one limited partner. This type of business has no minimum capital requirement to register a business.

-Branch office

Foreign companies can register a wholly foreign-owned Saudi Branch office after acquiring the necessary license. The office can only engage in commercial activity within the license’s scope. The business can promote and solicit business throughout Saudi Arabia and do work in the public and private sectors.

To establish a branch office in Saudi Arabia, you must have an existing GCC company in another country. The branch office is 100% owned by foreign investment. The branch must appoint a legal representative in Saudi Arabia. The Ministry of Commerce and Industry issues the certificate of registration to the business. The formation of this type of business is usually easier than other forms since there are no reserve requirements or Articles of Association.

A branch office is not a locally incorporated entity. The parent company assumes full liability for all activity that the branch office engages in. The company is required to deposit an amount equal to the capital requirement for subsidiaries. A minimum capital of SAR 500,000 is mandatory. This capital must be deposited with a local bank.

-Representative office

Saudi Arabian law permits the establishment of representative offices in the form of technical and scientific offices and temporary company registrations. Technical and scientific offices are often established to provide technical support to manufacturers through a distributor. Temporary company registration is a general business that is developed for a specific government contract.

These establishments are limited in the type of activities that they complete. Technical and scientific offices cannot complete commercial activities or earn revenue. Instead, they can only provide technical information and assist distributors and customers with products and market and technical research related to these products. Typically, only pharmaceutical companies can establish these offices. Companies that are not pharmaceutical in nature can only be formed with permission from the SAGIA and the Ministry of Commerce and Industry. Before they will approve this type of office, they must believe that the company’s products are sufficiently complex to justify the establishment of a technical and scientific office.

Progress in 11 steps as follows:

1. Reserving a company name

Authority: Ministry of Commerce and Industry is the authority of company registration in Saudi Arabia (KSA). Usually, a name reserved remains valid for two months. Thereafter the process has to be done again. The process requiring one working day if done online but requires no charge.

2. Submission of the articles of association & Notarization

Authority: Unified Center (UC)/Companies Department. Requiring one working day and no charge for submission of documents and authentication. Noting requires 3 days more and no charge.

3. Opening bank account

Authority: Bank. It is required 1 working day to open the account.

4. Obtaining a Business Location License from the Municipality and Registering with the Post Office.

Authority: Municipality of Riyadh and Post Office. It is required 1 working day and no charge.

5. Paying the registration fee

Authority: Bank in the premises of the Unified Center UC. The processing time is 1 working day. The company registration fee in Saudi Arabia is SAR500. More SAR 650 is required for the publication of a summary of Articles of Association AA.

6. Obtaining the Certificate of Registration

Authority: Unified Center (UC)/Companies Department and to obtain a certificate of company registration in Saudi Arabia might require 2 working days.

7. Payment of Chamber of Commerce membership fee & authorization of company Signatories by the Chamber.

Authority: Chamber of Commerce. The membership of the Chamber is SAR 2000. 1 Day to complete the job.

8. Registering with the Ministry of Labor

This process requires 1 working day but no costs.

9. Registering with the GOSI [General Organization for Social Insurance]

Authority: General Organization for Social Insurance GOSI The procedure requiring two working days to complete but no costs.

10. Registering with the Department of Zakat [DZIT]

Authority: Department of Zakat DZIT. 2 to 3 days are required to complete the registration process.

11. Opening a Branch Office in KSA

Well, it’s tough to get a foreign capital investment license from SAGIA as required to forming an LLC. In fact, this license SAGIA seldom issues. To bypass the issuance of such license the foreign investors are advised either to Form a Branch of a company registered in one of the member countries of GCC [Gulf Cooperation Council] exempted from this licensing or come into an agreement with a local. SAGIA is the authority to register a Branch office in KSA and requires the following documents to be submitted:
A letter from the Board of Directors of the parent company communicating the decision of opening a Branch or a marketing center, indicating the location and number of centers. The proposal should be authenticated by the Chamber of Commerce before submitting to SAGIA to incorporate a limited company.
Copy of the Articles of Association of the parent company authenticated by Ministry of Foreign Affairs KSA
The Shareholders shall be not government employees.
Copy of Passport or ID of the Branch Manager authenticated by the Ministry of Foreign Affairs KSA. In the case of Saudi Arabian nationals, a manager ID is required.
Certificate from Bank confirming deposition of Branch capital.
The branch capital shall be in line with the branch activity but shall not be and shall not be in any case less than SAR 25000.

To complete all the formalities 3-7 weeks' time and branch office registration fees are SAR 3390 might require.

Foreign investment prohibited activities

Saudi Arabia allows 100% foreign investment in the service sector. Trading and retail activities are permitted only for Saudi nationals or Saudi Arabian-owned entities.

Tax structure in Saudi Arabia

Saudi Arabia does not impose a personal income tax that employees earn. However, taxes are levied on companies based on how they are set up. Corporate tax is imposed on all registered entities, including companies or branches with foreign ownership. Unlisted companies must pay a corporate tax rate of 20%. Tax is imposed on the net adjusted profits. The share of profits to interests owned by non-Saudi or non-GCC nationals is subject to income tax.

The share of profits that are due to interests owned by Saudi or GCC nationals is subject to Zakat tax, which is a religious levy. It is 2%. Saudi citizens who are investors and GCC residents who are considered Saudi citizens for tax purposes are responsible for the payment of these taxes.