Saudi has made concerted efforts to attract greater foreign investment and expand private sector participation in the economy and streamline the business setup process. The country’s economy is already reaping the rewards of these reforms, with the private sector’s GDP contribution nearly doubling over the past decade.
More than ever, world-leading companies are now shifting their attention to Saudi as the ideal base for their operations, drawn by rapid economic transformation and sweeping policy reforms. However, many foreign companies still struggle to navigate the diverse and continuously evolving business landscape when entering the market.
Understanding these standards and aligning with local requirements is essential for a successful market entry. Whether you are already operating in the market or in the process of setting up a business in Saudi Arabia, this guide serves as your starting point for building local capability, achieving commercial success, and avoiding common pitfalls.
Why Foreign Companies Are Investing in Saudi
The path ahead for Saudi Arabia is still unfolding. The Kingdom is projected to rank among the world’s top 15 economies, supported by substantial investments in non-oil sectors such as tourism, logistics, and manufacturing—alongside giga-projects, the world’s most ambitious infrastructure initiatives collectively valued at over $1 trillion.
An obvious measure of economic growth is expanding GDP. For instance, in Q3 2025, the country’s GDP grew by 5%, the highest rate in ten consecutive quarters.
The government’s focus on diversification has accelerated foreign direct investment across sectors, making Saudi a priority market for a growing number of international companies and investors. As of Q3 2025, the Kingdom hosts over 780 regional headquarters, with plans to reach 1,000 by the end of the decade.
Strategic Advantages of Setting Up a Business in Saudi Arabia
Global Market Access
Located at the crossroads of Asia, Africa, and Europe, Saudi Arabia offers unmatched regional connectivity. Its central position and advanced logistics infrastructure make it an ideal base for regional headquarters and Global Capability Centers (GCCs). These help companies reduce logistics and distribution costs, particularly when expanding into emerging markets across Africa, South Asia, and the wider Middle East.
Leading firms such as Unipart, supported by AstroLabs, have already established their regional bases in Saudi Arabia, leveraging the Kingdom as a platform for global growth.
Early-Mover Advantage
Setting up early in Saudi Arabia enables companies to capitalize on rapid growth and participate in Vision 2030-led projects, thereby strengthening their regional positioning. A local hub allows companies to detect market shifts, ride the wave of change with growing confidence, and deepen market connections.
The steep rise in large-scale projects associated with construction and hosting global events such as Riyadh Expo 2030 and the 2034 FIFA World Cup presents a once-in-a-generation opportunity for international companies to be part of global spectacles.
Tips for Successfully Doing Business in Saudi
Business Structure
Selecting an appropriate business structure is one of the initial steps toward company formation in Saudi. Investors can choose from several structures depending on ownership goals and operational needs. This includes subsidiaries, branches, joint-stock companies, and regional headquarters. The LLC structure is the most common among foreign entrepreneurs.
Tax Efficiency and Compliance
Saudi maintains a transparent and business-friendly tax regime, with a Value Added Tax (VAT) rate of 15%, a Corporate Income Tax rate of 20%, and a Withholding Tax ranging from 5% to 20%, depending on the business type and transaction. Crucially, understanding these parameters helps companies plan effectively and avoid compliance risks.
Registered National Address
Each company must have a registered office address in Saudi Arabia, a key component of the first stage of the business setup process in Saudi Arabia. AstroLabs’ rapidly expanding network of private offices in the Al-Malqa district serves as a prominent launchpad for high-growth companies entering the Kingdom. To clarify, companies such as Virgin Atlantic and Bespin have established their main Riyadh hubs at AstroLabs’ private offices.
Saudization Regulations
Companies must meet sector-specific Saudization quotas to remain compliant. In fact, falling into the Red Zone for non-compliance can result in the loss of the Saudization certificate. This document is a key requirement for government tenders and contracts. Per the new Saudization policies for 2025, companies are required to increase local employment across 269 professions in pharmacy, dentistry, engineering, and accounting units.
Government Portals
Keeping government platforms up to date—such as Qiwa, Muqeem, MHRSD, GOSI, and ZATCA—is crucial for smooth operations. Failure to maintain compliance can lead to operational interruptions.
What You Need to Know About Business Culture in Saudi Arabia
Relationships are the cornerstone of business success. Cultural awareness and respect for local customs are key to building long-term relationships with stakeholders, investors, and clients—often determining the strength and longevity of business operations.
Key cultural principles include
- In-person engagement: Building trust through direct, face-to-face interaction remains vital for developing strong relationships.
- Patience and flexibility: Decision-making may involve multiple stakeholders, and long-term commitment is highly valued.
- Respect for customs: Observing local etiquette—from attire to hospitality—signals professionalism and respect. Being mindful of prayer times and cultural norms creates a foundation of trust.
- Language and communication: Influenced by its multicultural environment, English is widely used, and the majority of Saudis speak English. However, learning basic Arabic phrases shows goodwill and helps build rapport with clients, policymakers, and stakeholders. It is particularly crucial when dealing with elders or in certain settings like landlord interactions or immigration offices.
- Business calendar: The workweek in Saudi runs from Sunday through Thursday, unlike other countries where the workweek starts on Monday and ends on Friday. This shift can require adjustment for foreign businesses.
- Religious holidays: Saudi culture is deeply rooted in Islamic principles. Prayer times should be considered when planning daily business activities. Religious holidays such as Ramadan, Eid Al-Fitr, and Eid Al-Adha may slow business operations. Foreign businesses have to foster respect for and familiarity with these occasions.
- Lifestyle: Adapting to Saudi Arabia’s customs, practices, and leisure activities can present a learning curve for expats. Entertainment options may differ from those abroad, requiring openness and flexibility.
- Networking: Personal relationships are the bedrock of business dealings in Saudi Arabia. Businesses need to prioritize relationship-building through networking events, business dinners, and meetings. Understanding common values and showing genuine interest in Saudi culture is essential for forming meaningful connections.
- Cultural intelligence: Nurturing cultural awareness requires a multi-pronged approach, including cross-cultural training for employees, forming multicultural teams, and planning activities that integrate foreign employees into local culture and traditions.
For businesses eyeing growth in this competitive market, understanding the nuances of business setup in Saudi Arabia and adapting to local customs is paramount to ensuring the success of their market entry strategy.