Saudi Arabia

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DOING BUSINESS

 


Local business incentives - Legal forms of companies - Registration and licensing procedures - Legal framework - Foreign exchange control - Regulations concerning equity investment - FDI inflows - Expertise of the political risk

Local business incentives

The government has created industrial sites attracting foreign investors in Riyadh, Jeddah, Dammam, Qaseem, Al-Ahsa and Makkah. The set up of a subsidiary allows tax exemptions for 5 years. The State provides with electricity, water, fuel...at low prices when industrial plans are involved. The government encourages partnership with local companies, granting more aids and advantages to companies whose capital is shared with Saudis. The Department of Industry and Electricity, the Department of Finance should be contacted in order to know the various helps granted to foreign investors. The SAGIA (Saudi Arabian General Investment Authority) may be contacted for further information about investment laws and opportunities in Saudi Arabia.

 

Legal forms of companies

Form Number of partners/shareholders Minimum and/or maximum capital Liability Registration fee Release of financial documents
The Sole Proprietorship is a single-partner company. 1 person No minimum capital. The individual entrepreneur is liable for debts the company on his personal possessions. No
Sharikat Al-Mossahamah (S.A.M) is a Public Limited Company. Minimum 5 partners. Minimum SR 2 million. If the capital is open to the public, Minimum SR 10 million. Liability is limited to the amount contributed.
SHARIKAT ZAT MASSOULIYYAH MAHDOOAH (S.M.M) is a Private Limited Company. Minimum 2 partners. Maximum 50 partners. Minimum SR 500,000, but in practice, rarely less than SR 1 million. Liability is limited to the amount contributed.
Sharikat Tadhamou is a general partnership Minimum 2 partners. No minimum capital. Liability is unlimited.
Sharikat Tawsiyah Bel-ashom - Ashom is a partnership limited by shares. Minimum 2 partners. Minimum SR 100,000. At least 50% issued at the registration. At least one partner must have an unlimited liability. Liability of other partners is limited to the amount contributed.

Registration and licensing procedures
The Department of Industry has to issue a license to any new business. Banking companies depend on the Ministry of Finance. Companies must be registered with the Department of Commercial Registration which address is : Department of Commercial Registration / Agencies Section / Ministry of Trade / the PO BOX 1774 / Riyadh 11162.

Legal framework
The Saudi authorities allow foreign investments which plans enable the development of industry, agriculture, health and certain services.

Foreign exchange control
There is no regulation or control on capital transfers. In certain cases, dividends are transferable after the obtention of a certificate issued by tax authorities.

Regulations concerning equity investment
A legal framework has been developed in 1979, particularly with the "Foreign Capital Investment Code", dating from December 1979, in order to open the Saudi market to non-nationals.  


Foreign Direct Investment inflows in Saudi Arabia

FDI inflows 2003 2004 2005 World rank (*)
2005
FDI inflows (USD million) 778 1942 4 628 110/141
Source : UNCTAD - World Investment Report
Note : (*) World Rank = UNCTAD Inward FDI Performance Index. It is a measure of the extend to which a host country receives inward FDI relative to its economic size. It is calculated as a ratio of the country's share in global FDI inflows to its share in global GDP.

 

Last modified in 2006 - ongoing update
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