Saudi Arabia Business Setup 2026: Myths vs. Realities

More than ever, expanding to Saudi has shifted from being a competitive advantage to an essential growth strategy. Last year, the number of regional headquarters (RHQs) in the Kingdom reached 780, surpassing the initial Vision 2030 goal of attracting 500, five years ahead of schedule.

Drawing on our experience working with over 900 firms that have already set up a business in Saudi Arabia, we address the most common misconceptions about company formation, highlighting the gap between widespread assumptions and the realities of doing business in the Kingdom.

This guide will explore how these myths come about and how your business can successfully navigate them during your own Saudi expansion journey in 2026.

Do You Need a Local Presence to Win Contracts?

The Reality: Companies entering Saudi Arabia often rely on solid local partners to help them establish operations, build the right networks, and access the tools and services needed to grow and scale.

Clarification: While not every single contract requires a local entity, the trend over the past 15 months has shifted dramatically toward requiring local presence—especially for government and large corporate contracts.

Insight: For government entities and ministries, a local presence is now required in most cases, even to bid for projects. In fact, bidding through Etimad requires a commercial registration. For large semi-government entities or major corporations—particularly PIF-related projects—local incorporation is now explicitly required to execute or sign contracts. Even when corporates don't formally mandate local presence, companies with local establishments consistently fare better against foreign competitors.

Building Your Network: The Hidden Success Factor

The reality: Success requires more than just meeting legal requirements and finishing post-setup mandatory tasks; a lasting market presence is anchored in strategic networking.

Clarification: Personal connections form the foundation of successful business dealings in the Kingdom. Therefore, companies should invest time in cultivating relationships by participating in C-suite networking and executive gatherings

Insight: By prioritizing relationship-building, businesses gain exclusive access to market intelligence and strategic opportunities often not visible in traditional channels.

Tapping into an established ecosystem of companies and stakeholders—such as AstroLabs’ Network—helps accelerate market entry and enable fast integration into the Saudi economy. By facilitating key introductions and strategic collaborations with clients and investors, this crucial gateway empowers companies to build a sustainable, competitive long-term moat in Saudi’s ever-evolving market conditions.

Regional Headquarters and Market Access: What Companies Should Know

The Reality: Not every company holding a government contract has an RHQ license; there are too many government contracts and not enough RHQs of qualifying size to meet demand.

Clarification: The RHQ itself is not considered a commercial entity on its own. Companies have to obtain a traditional MISA license to start operating, dealing with clients, and having an operating status and taxable business. One key prerequisite is having at least 15 employees on the ground in Saudi Arabia.

Insight: Not as many companies can satisfy the conditions for an RHQ status, particularly SaaS providers in their early stages. An RHQ is a compelling proposition for large multinationals but not essential for market entry or a key requirement to win government contracts in the market. For companies lacking the financial requirements to set up an RHQ, it is recommended to first build a local commercial entity before scaling to an RHQ.

Whether you're establishing a subsidiary or branch office, finding the right workspace that fits your budget and team requirements is a foundational element of a successful market entry. Our network of offices in Al Malqa district, Riyadh, has long served as the launchpad for several high-growth companies across sectors; these include Virgin Atlantic and Bespin, to name a few.

Setup Timeline: How Long Does It Actually Take?

The Reality: Full establishment, from acquiring a MISA license to opening a bank account, takes three to four months. The timeline can take longer depending on the company and target industry.

Clarification: Many companies confuse obtaining a commercial registration (3-4 weeks) with being fully operational, leading to unrealistic expectations about when they can actually pursue governmental contracts.

Insight: The commercial registration allows you to bid for contracts, but it is not enough to be fully operational. For example, to be able to create an account on Etimad, you need to have an open bank account, have a tax registration number, and ensure that your company's general manager has an Absher account.

The timeline can definitely be longer than four months due to delays at various stages—such as a delayed general manager's visit to Saudi Arabia, which can put a drag on Iqama issuance if systems are being updated or if your setup process coincides with Ramadan, Eid, or holidays.

Pre-Setup Documentation: What Needs to Happen First?

The Reality: Document preparation must be completed before the MISA license stage and can take 2-4 weeks or longer.

Clarification: Companies often underestimate the time taken to complete document attestation or apostille, which varies significantly by country.

Insight: All documentation—including commercial registration, audited financial statements, and Articles of Association—must be attested or notarized and apostilled in the country where the entity is based. The UK and the US are signatories to the Hague Convention, allowing documents to be apostilled relatively quickly.

Countries like the UAE, which is not a signatory, require full attestation that can take five to ten days. For larger companies, internal approval processes can have longer timelines.

The General Manager Visit: What's Required On-Ground?

The Reality: The general manager needs to be physically present in Saudi Arabia for approximately five working days.

Clarification: This is the only point at which the appointed GM must be in-country, and it represents the final stage of setting up the commercial entity. The GM’s initial in-person visit to Saudi Arabia is a critical milestone in the Saudi business setup journey.

Insight: Five working days are sufficient for the GM to complete all required processes, including activities needed to open the corporate bank account and become fully operational. Some providers quote two or three weeks, but this is not necessary.

Top Mistakes to Avoid During Your 2026 Saudi Arabia Business Setup

Company formation misconceptions can often discourage people with strong business ideas from taking the next step. But taking the well-trodden path maximizes your chances at unlocking the market's full potential. Here are key takeaways:

The core setup process is the same regardless of country: The registration timeline is uniform, and certain preparatory work and certain verification processes can also differ by country of origin.

Compliance is ongoing: At the core of a successful business setup process in Saudi Arabia is addressing compliance requirements throughout various stages of incorporation.

Establish GM powers early: It is advisable to establish GM powers before reaching this stage of Saudi market expansion and have them formalized in the company's Articles of Association (AoA) to avoid disruptions.

Don't skip steps: Skipping any step in the three-stage market entry process is counterproductive, often requiring companies to start the whole process from the top.

The Saudi market is vast and brimming with opportunities for those who approach it with agility, preparation, and commitment to build a long-term presence. Understanding these common myths is a significant step towards safeguarding your company's Saudi aspirations.