Saudi Arabia has rapidly become one of the most attractive destinations for entrepreneurs and foreign investors. With its strategic location, booming economy, and business-friendly reforms under Vision 2030, the Kingdom is opening its doors to international businesses like never before. But before you can officially begin operations, you must follow the legal requirements for setting up a company in Saudi Arabia.

This detailed guide explains every essential step—from obtaining licenses to meeting labor compliance—so you can confidently start your business in Saudi Arabia.

1. Obtain the Investment License (For Foreign Investors) – MISA

For foreign investors, the first and most crucial requirement is the Investment License issued by the Ministry of Investment of Saudi Arabia (MISA). Without this license, a foreign entity cannot conduct commercial activities.

Key documents required:

• Parent company’s Certificate of Incorporation
  
• Memorandum & Articles of Association
• Last financial year audit repot

• Board Resolution authorizing formation of the Saudi company
  
• Power of Attorney (POA) for a local representative
  
• Passport copies of shareholders or directors
  

All documents must be attested, notarized, and legally translated into Arabic.

2. Register the Company with the Ministry of Commerce (MOC)

After securing the MISA license, the next legal requirement is establishing your company with the Ministry of Commerce (MOC). This process officially creates your legal entity in Saudi Arabia and issues the Commercial Registration (CR).

What needs to be submitted?

• Articles of Association (AoA)
  
• Company name reservation
  
• Shareholder details
  
• MISA investment license (for foreign-owned entities)
  
• Capital information
  

Once approved, you receive the Commercial Registration certificate, which legally allows your company to exist and operate.

3. Obtain the Municipal License (Baladiya License)

Every business operating in Saudi Arabia must have a physical office space. To verify this, you must apply for a Municipal License from the local authority, known as Baladiya.

Requirements include:

• Office lease agreement (Ejari contract)
  
• Commercial Registration copy
  
• Identification of authorized signatory
  

This license is legally required to:

• Activate the company address
  
• Begin official operations
  
• Apply for additional government services
  

4. Register with ZATCA (Tax Authority)

All companies must register with Zakat, Tax and Customs Authority (ZATCA). Even if your company is 100% foreign-owned, you must meet tax requirements.

Legal obligations include:

• Tax Registration Number (TRN)
  
• VAT registration (mandatory if annual revenue exceeds SAR 375,000)
  
• Zakat obligations for Saudi and GCC shareholders
  
• Excise tax registration for specific industries (e.g., tobacco, soft drinks)
  

Businesses must file tax returns regularly to avoid penalties.

5. Become a Member of the Chamber of Commerce

A Chamber of Commerce membership is another mandatory legal requirement. It is needed for:

• Authenticating company documents
  
• Approving official letters
  
• Participating in government or private tenders
  
• Using digital business services
  

Membership can be obtained online once the CR is issued.

6. Open a Corporate Bank Account

Once your company is legally registered, you can open a corporate bank account. This step is essential because Saudi authorities require local banking for:

• Capital deposit
  
• Employee salaries
  
• Paying taxes
  
• Receiving business payments
  

Banks will usually request:

• Commercial Registration
  
• MISA license (if applicable)
  
• Municipal license
  
• Articles of Association
  
• Passport/ID of authorized signatory
  

7. Register with Labor and Employment Platforms

Saudi Arabia has strict labor compliance guidelines. To legally hire employees, you must register your company with the mandatory government platforms:

• Qiwa

Manages employment contracts, Saudization, and HR compliance.

• GOSI

Manages social insurance contributions for both Saudi and expatriate workers.

• Mudad

Ensures proper payroll processing as per Saudi labor laws.

• Absher

Used for managing expat work permits, residency, and visas.

Registering in these systems ensures full legal compliance with Saudi labor laws.

8. Meet Saudization (Nitaqat) Requirements

Saudi Arabia requires all companies to hire a minimum percentage of Saudi nationals under the Saudization (Nitaqat) program. The required percentage depends on:

• Industry sector
  
• Company size
  
• Number of employees
  

Failure to meet Saudization rules can result in:

• Inability to renew existing employee visas
  
• Inability to hire new expatriate employees
  
• Blocked company services
  

Businesses should plan their workforce structure early to meet these legal obligations.

9. File Beneficial Ownership Declaration (UBO)

Every company in Saudi Arabia must declare its Ultimate Beneficial Owners (UBO) with MOC. This requirement helps promote transparency and prevent fraud.

The declaration includes:

• Names of individuals with significant ownership
  
• Ownership percentage
  
• Passport and ID details
  

UBO filing is mandatory, and penalties apply for delays or inaccuracies.

10. Obtain Sector-Specific Approvals (If Applicable)

Certain industries require additional licenses beyond the standard setup process. Here are examples:

• Healthcare: Ministry of Health
  
• Telecommunications & IT: CITC
  
• Food, cosmetics, medical devices: Saudi Food and Drug Authority (SFDA)
  
• Education: Ministry of Education
  
• Financial services: Saudi Central Bank (SAMA)
  
• Tourism: Ministry of Tourism
  

It is essential to check whether your business activity requires special regulatory approval.

FAQs

1. What are the legal requirements for setting up a company in Saudi Arabia?

To legally establish a company, you must obtain a MISA investment license (for foreign investors), register with the Ministry of Commerce (MOC), secure a municipal license, register with ZATCA for tax, join the Chamber of Commerce, open a corporate bank account, and register with HR platforms such as Qiwa, GOSI, Mudad, and Absher. Additional approvals may apply for regulated industries.

2. Can foreign investors own 100% of a company in Saudi Arabia?

Yes. Many sectors allow 100% foreign ownership, especially in trading, services,, manufacturing, IT, and industrial activities. However, certain industries may require a local partner or special approvals.

3. How long does it take to set up a business in Saudi Arabia?

The full setup typically takes 45 weeks, depending on the type of company, documentation readiness, attestation timelines, and additional sectoral approvals if required.

4. What types of companies can be formed in Saudi Arabia?

Common structures include:

• Limited Liability Company (LLC)
  
• Branch/subsidiary of a Foreign Company
  
• Joint Stock Company (JSC)
  
• Technical and Scientific Services Office (TSSO)
  

The LLC is the most popular for startups and SMEs.

5. Is a physical office required to register a company?

Yes. A physical office or approved virtual office is required to obtain the municipal (Baladiya) license and activate your Commercial Registration.

6. What are the Saudization requirements for new companies?

Companies must hire a minimum percentage of Saudi nationals as per the Nitaqat (Saudization) program. The required percentage depends on the industry, company size, and number of employees.

7. Do companies in Saudi Arabia need to register for VAT?

Yes, if your annual revenue exceeds SAR 375,000, VAT registration with ZATCA is mandatory. Voluntary registration is allowed at SAR 187,500.

Conclusion

Setting up a business in Saudi Arabia is now easier than ever thanks to streamlined digital processes, supportive regulations, and the Kingdom’s rapidly growing market. However, navigating the legal requirements—MISA licensing, Commercial Registration, municipal permits, tax compliance, Saudization, and HR platform setup—can be complex without the right guidance.

Whether you are a startup, SME, or foreign investor, ensuring full compliance from day one is essential for smooth operations and long-term success in the Saudi market.

If you need help understanding the requirements or managing the entire setup process, ArabDreams offers free consultation to guide you step-by-step through company formation, licensing, documentation, and ongoing compliance in Saudi Arabia. Our experts ensure a fast, hassle-free business setup experience tailored to your needs.