Foreign Investment in Saudi Arabia

Written by StartRight Team

Saudi Arabia, the Middle East’s largest economy, is becoming more attractive to investors. In the past few years, particularly with the emergence of Vision 2030, the government has taken several steps to attract foreign investors into the Kingdom feeding into the vision’s goal to turn it into a more diversified private-sector-led structure. In fact, in 2021, over 30% of investors in local startups were based outside the Kingdom. Additionally, 94% of investments done in 2020 were achieved before August 2021. The government and particularly the Ministry of Investment (MISA) constantly introduce new schemes to facilitate foreign investment in the Kingdom. MISA sets the regulations for obtaining an investment license which can be done either as a foreign company or through the premium residency scheme for individuals.

Investment License

For a foreign investor in KSA, the first step is to obtain a license from the Ministry of Investment (MISA). There are several types of licenses that could be obtained depending on the type of activity/ company that is opening in KSA. These licenses are aimed at foreign companies that wish to expand their business into KSA. The types of licenses are based on the nature of the work and have different conditions for each type. One of the most used licenses is the Services License which includes a wide range of activities. The requirements for this license are quite flexible with no minimum capital requirement and 100% ownership. Whereas a Commercial License sets more rigid Capital requirements. There are two main requirements for most of the licenses. First, a copy of the commercial registration of the shareholding partner certified by the Saudi Embassy, a copy of the national identity for GCC citizens, and a copy of the national identity and a statement by Absher to prove the profession or a copy of the commercial registration of a Saudi company he has shares in (if there is a Saudi Partner). Second, Financial statements of the last financial year for the foreign company certified by the Saudi Embassy. The general cost to obtain investment licenses is $16,000 annually, except for the first year which cost $2,666.

Premium residency

Another option for foreign investors is Premium Residency. Premium residency, a scheme put into place in 2021, allows investors to apply for a permanent/ renewable resident permit which gives them rights equal to Saudi investors. The premium residency gives its holder the right to live, work and own business and property in the kingdom. This in turn means that there is no prerequisite that the investor has a company abroad and will be treated like a Saudi investor.  The scheme offers two types of premium residency, a permanent residency, and a temporary residency. The permanent residency costs about $213,000 and the temporary residency is valid for a year and renewable at a cost of $26,000 per year. The requirements of the premium residency are straightforward, a valid passport, the applicant must be 21 years of age, proof of the applicant’s financial solvency, a clear criminal record with proof, a health report on the applicant’s condition proving that he is free from contagious diseases within six months and having a legal residency status in the Kingdom (if the application was submitted from within the Kingdom). 

Commercial Registration

After obtaining an investment license whether through premium residency or not, the investor must obtain a commercial registration certificate from the Ministry of Commerce to register the company in KSA. The main requirements for commercial registration are having an office in KSA, notarizing Articles of Association, depositing the capital, and paying commercial registration fees. Which varies depending on the company type. This will automatically register the company with the Chamber of Commerce, the General Authority of Zakat and Tax, the General Authority of Social Insurance, the Municipality, and the Labor office. The Company will then have to activate its accounts on all these platforms.

Equalizing Between Foreign and Saudi Investors

The Ministry of Investment is currently drafting a new Investment Law under which local and foreign investors are to be treated equally. MISA is in the process of performing studies regarding the provisions of the draft law. The provisions of this draft law ensure the equal treatment of foreign and local investors regarding their direct investments. Foreign investors will enjoy neutral treatment without any discrimination and will have the freedom to manage, sell and dispose of their economic projects as well as own property as needed to fulfill their projects. The provisions also provide the mechanisms for transferring funds into and out of the Kingdom including the transfer of the proceeds and profits of the project. The law aims to support competitive neutrality and fairness to ensure equal opportunities in the treatment of direct investments by local and foreign investors.


There are three types of taxes that apply to companies and their systems. Corporate income tax of a 20% rate on the net adjusted profits of non-Saudi citizens. There is also a withholding tax of rates between 5% to 20% based on the type of service provided by the company and is imposed on businesses earning money from non-residential activities such as rent, royalties, and management fees. The third tax is the Zakat tax, which subjects local Saudi investors and business shareholders on a rate of 2.5% tax on their share of the Zakat base in a company.

Note: In addition to the aforementioned documents, some additional documents, approvals, or licenses may be required depending on the company’s activity and type.