Understanding business regulations in Saudi Arabia is key to ensuring a smooth company formation process.
In this article, you will find information about business set-up legal parameters, such as licensing and commercial registration, as well as post-setup compliance requirements, including taxation and Saudization (Nitaqat) policy.
This guide also highlights the anticipated changes to business laws in Saudi Arabia in 2025.
Company Regulations in Saudi Arabia After Market Expansion
Foreign Business Licensing: Procedures and Requirements
Global businesses expanding to Saudi Arabia in 2025 must first obtain the Ministry of Investment (MISA) license.
Firstly, the process of acquiring a MISA license typically starts with selecting the right business license, depending on the nature of the business activities. Basically, there are eight types of licenses offered by MISA. This includes service, real estate, agriculture, mining, industrial, entrepreneurial, trade, and professional.
Afterward, it is important to decide on a structure for the Saudi entity. Main structure types include but are not limited to, foreign company subsidiaries, limited liability companies (LLC), joint stock companies (JSC), regional headquarters (RHQ), and technical and scientific services offices (TSSO). The choice of company structure has far-reaching implications for crucial business areas such as taxation and compliance.
A vital part of the process is preparing the essential foundational documents.
Here’s the Complete Checklist of Company Registration Documents:
- Commercial registration from the original country, authenticated by a Saudi embassy
- Financial statements from the last year, prepared by a legal office and authenticated
- Articles of Association/Memorandum of Association
All documents must be attested by the Ministry of Foreign Affairs and the Saudi Embassy.
After preparing the company’s documents, businesses shall proceed with registering with MISA’s portal to complete the online application. But, if applying for two licenses under one entity, a company ought to create a separate account for the branch license.
Commercial Registration (CR): Top Considerations for Foreign Businesses in 2025
Upon securing the MISA license, a company can file a commercial registration (CR) application through the Ministry of Commerce’s portal.
The Kingdom has recently introduced legal changes via a new commercial registration law and trade names to streamline business operations and attract global businesses.
Key Elements of the Commercial Registration Law:
- Unified CR System
The new law introduces a national commercial registration system, requiring only one national CR for all activities, including branches.
- Grace Period for Existing Companies
A five-year grace period allows existing companies to rectify inconsistencies in their branch CRs, enabling them to establish a new company or transfer branch activities to their main CR.
- Annual CR Confirmation
While the CR will no longer expire, companies must confirm their CR information annually. Failure to do so may result in suspension or cancellation.
- Alternative Penalty Measures
To foster a flexible business environment, the law introduces alternative penalties like warnings, rectification orders, and financial penalties.
- Bank Account Requirement
Companies must maintain bank accounts linked to their CR for secure, transparent transactions.
Key Elements of the New Tradename Law:
- Advance Tradename Reservation
The law permits the reservation of trade names for a specified period, with options for extension.
- Use of Non-Arabic Names
Trade names can include Arabic or non-Arabic names, as well as transliterations and combinations of letters and numbers.
- Independent Tradename Ownership
Trade names can be independent assets that may be assigned to others.
- Arabic Language Enhancement
An Arabic Experts portal will promote authentic Arabic names in commerce.
- Protection of Reserved Tradenames
Unauthorized use of reserved trade names is prohibited.
- Unique Tradename Requirement
Tradenames must be distinct and not resemble existing names, irrespective of business type.
Post-Business Setup Regulations in Saudi Arabia
Taxation in Saudi Arabia: What to Expect in 2025
Saudi Arabia’s strong position as a leading financial and business hub is strengthened by its pro-business tax policies.
Primary taxes applicable to companies operating in the Kingdom, include value-added tax (VAT), corporate income tax, Zakat, and withholding taxes.
To stimulate business growth, the Saudi government offers various tax incentives, particularly in special economic zones (SEZs). These incentives include a reduced corporate income tax rate of 5% for up to 20 years, 0% withholding tax on profit repatriation, and exemptions from customs duties on capital equipment.
Additionally, businesses in underdeveloped areas may also benefit from 10-year tax relief and additional incentives based on employment levels.
What’s more, the country has extended its tax amnesty initiative until 31 June 2025. The decision offers exemptions for taxpayers who meet the requirements.
It essentially covers fines related to late registration, payment, and filing of returns, as well as VAT return correction fines and penalties for field violations related to e-invoicing and general VAT rules.
Related read: Business Taxes in Saudi Arabia 2025: VAT, Corporate Income Tax, Zakat & More
Saudization (Nitaqat): Increased Nationalization Rates in 2025
Foreign businesses operating in Saudi Arabia must be well acquainted with the Saudization policy, which mandates hiring certain percentages of nationals to ensure compliance with local labor law.
Earlier this year, Saudi Arabia expanded its Saudization policy across 269 professions, including pharmacy, dentistry, healthcare, accounting, and engineering. These changes are rolling out in phases throughout 2025, with government support available for recruitment and training to facilitate compliance.
In fact, the decision builds on earlier rules aimed at increasing nationalization levels in diverse professions and key sectors to boost local employment, a crucial area of focus in Vision 2030.
Frequently Asked Questions about Business Regulations in Saudi 2025
- What is the process for obtaining business licenses in Saudi Arabia in 2025?
The guide below outlines the steps the process requires.
- Determine Your Business Structure
- Prepare Necessary Incorporation Documents
- Submit Application submission
- Register a Business Name
- Draft Articles of Association (AoA)
- Apply for a Commercial Registration Certificate
2. What is the validity of a business license?
Most licenses are valid for one year and require annual renewal.
3. What measures are being taken to enhance corporate governance in Saudi Arabia?
Over 800 reforms have been implemented to boost foreign investment. Chief among these are the Civil Transactions Law, the Bankruptcy Law, and the New Companies Law.
4. What steps are being taken to improve the ease of doing business in Saudi Arabia?
In 2025, Saudi Arabia is to implement significant changes to business regulations, aligning with the Kingdom’s Vision 2030 to create an investment climate conducive to business expansion and growth. These reforms include new laws and regulations affecting commercial registration and trade names.
5. What are the new compliance requirements for startups in Saudi Arabia?
Businesses operating in Saudi Arabia ought to adhere to a specific set of requirements. These include compliance with annual tax filings, the Saudization (Nitaqat) quota, and keeping the company’s records accurately updated on key government portals such as Muqeem, Qiwa, and Mudad.
5. How much does it cost to establish a company in Saudi Arabia?
Typically, business setup expenses for the first year are around SR550,000 or $172,000. This encompasses incorporation fees, recruitment, office spaces, compliance and renewals, and third-party services.
6. What are the additional permits or approvals I might need for a business license?
Depending on your industry, you may evidently be required to get additional permits from relevant government entities.