Foreign companies in the process of their Saudi market entry can select from eight distinct MISA business licenses in Saudi Arabia, with each applying to certain industries and business activities.
Acquiring a one-year license from the Ministry of Investment (MISA) is the first step in foreign company formation in Saudi Arabia, creating a solid foundation for operational efficiency from the ground up.
In this article, we will take a deep dive into the most common types of business licenses for foreign companies in Saudi Arabia, as well as the requirements for acquiring them.
MISA Business Licenses Types in Saudi Arabia
Below is an overview of the main types of MISA business licenses in Saudi Arabia.
1. Service License Requirements in Saudi Arabia (100% ownership permitted)
Foreign companies that provide a wide range of services in Saudi Arabia. These include restaurants, marketing agencies, IT services providers, web or app development firms, among others.
Requirements:
- Business established outside of KSA for more than 1 year (not a sole proprietorship)
- Minimum capital of SAR 25,000
2. Entrepreneurial License Requirements in Saudi Arabia
This license caters to startups, aiming to encourage innovation and entrepreneurship.
Holders of this license can benefit from a myriad of financial and non-financial incentives such as streamlined licensing regulations, reduced fees, and access to government-led support programs.
Requirements:
The startup should have:
- Either a patented idea, VC-backed, or a support letter from a government entity (MISA, PIF, CODE, KAUST, TDF)
- Endorsement letter & MISA pre-approval
3. Industrial License Requirements in Saudi Arabia
An industrial license allows foreign companies to establish manufacturing facilities in Saudi Arabia.
Requirements:
- Business established outside of KSA for more than 1 year (not a sole proprietorship)
- Minimum capital of SAR 25,000
4. Agricultural License Requirements in Saudi Arabia
Foreign businesses can obtain a specialized license to conduct farming operations in Saudi Arabia. This license covers activities like crop cultivation and animal husbandry.
Requirements:
- Business established outside of KSA for more than 1 year (not a sole proprietorship)
- Minimum capital of SAR 25,000
5. Real Estate License Requirements in Saudi Arabia
This service is provided to foreign real estate development companies, provided that the total cost of the project is not less than SAR 30 million and the investment is established outside the borders of the cities of Mecca and Medina.
6. Trade License (Commercial License) Requirements in Saudi Arabia
A Saudi trade or trading license allows foreign companies to import and export goods in Saudi Arabia.
Requirements for Trade License
Foreign trading companies can pursue investment opportunities in Saudi through specific pathways.
100% foreign ownership:
- The company should have three branches in different countries outside Saudi Arabia
- SAR 30 million capital needs to be injected/invested in the first year
- SAR 170 million capital needs to be invested in the next 5 years in the Saudi company
25% Saudi partner:
- No need for branches
- SAR 26,666,666 capital needs to be injected/invested in the first year and foreign capital shareholding cannot be less than SAR 20 million
- No need to invest 170,000,000 SAR in the entity in 5 years
For 100% GCC-National Owned Companies:
GCC nationals enjoy the same rights as Saudi nationals; they don’t require any of the above.
- Minimum capital of SAR 50,000
7. Mining License Requirements in Saudi Arabia
A mining license applies to foreign companies intending to engage in mining activities in Saudi Arabia.
Requirements:
- Business established outside of KSA for more than 1 year (not a sole proprietorship)
- Minimum capital of SAR 25,000
8. Professional License Requirements in Saudi Arabia
A professional license allows foreign professionals in Saudi to practice law, consultancy, engineering, and architecture and provide services such as tax advisory services.
Requirements:
A MISA professional license requires companies in specific consulting activities focused on spaces like engineering, marine, and mining; prospective holders must have a minimum of a 25% local partner with years of experience in the field
Alternatively, for a company (in reference to engineering firms) to qualify for 100% foreign ownership, it must meet the following requirements:
- Four branches
- The share capital of one branch should be equal to SAR 10 million.
- 7+ years of experience
After obtaining a MISA business license, it’s paramount to be well-prepared to proceed with the incorporation steps. Reach out to AstroLabs to get access to the full range of corporate advisory services along with company formation services to help your business set up smoothly and grow significantly in Saudi Arabia.