What is SAGIA? Business Setup in Saudi Arabia

What is SAGIA? Business Setup in Saudi Arabia

 

Launched in 2000 by the government of Saudi Arabia, the Saudi Arabian General Investment Authority (SAGIA) is the country’s foreign investment license provider.

SAGIA was established to provide quick and smooth company registration, investment application and business setup in Saudi Arabia with an assured verdict for foreign investment application within 30 days of submission to SAGIA.

There are various incentives in SAGIA company formation in Saudi Arabia. They are classified into regulatory and financial incentives.

 

Regulatory Incentives – Business Setup in Saudi Arabia

The Saudi government introduced significant regulatory incentives along with the new Foreign Investment Law. They include:

  • Accelerated business setup, investment application and company registration process.
  • Transferring / allocation companies’ shares between shareholders are
  • Minimum capital is not a requirement for Limited Liability Companies (LLCs).
  • Direct property ownership for the registered company including allocation of residence and employees.
  • Foreign investors will also benefit from the guarantees and incentives that Saudi national investors receive.
  • Eligible to request loans from the Saudi Industrial Development Fund.
  • Profit and capital can be transferred
  • The registered company sponsors the employees and its investors (non-Saudi nationals).

 

Financial Incentives – Business Setup in Saudi Arabia

Here are the financial incentives introduced by the Saudi government:

  • No personal income tax
  • Benefit from collateral and agreements regarding investment and taxation with other countries.
  • 20% tax from total companies’ profits
  • Losses can be transferred for forthcoming years in regards to taxes.
  • Competitive utility rates for industries, including power, water and land.
  • Foreign investors have access to various financial programs, including, Saudi Industrial Development Fund, Arab Trade Financing Program, Arab Monetary Fund, Islamic Development Bank, Arab Fund for Economic and Social Development (AFESD), Inter-Arab Investment Guarantee Corporation.

 

Tax Incentives – Business Setup in Saudi Arabia

  • 50% reduction of tax from annual expenditures for recruiting and training Saudi nationals.
  • 50% reduction of tax from annual incomes of Saudi nationals
  • Reduction of tax for industrial projects in certain areas where non-Saudi nationals’ share in capital does not exceed 15%.

 

10 Small Business Ideas in Saudi Arabia

10 Small Business Ideas in Saudi Arabia

business ideas in saudi arabia

What are the best small scale business ideas in Saudi Arabia? Are you planning to start a business in Saudi Arabia and you want to know the best business ideas to start?

The Kingdom of Saudi Arabia (KSA) is the largest oil producer in the world, acquiring approximately 25 percent of the petroleum reserves in the world. You will find various business opportunities in Saudi Arabia covering numerous sectors aside from oil for investors to invest on. The KSA government provides foreign investors various incentives keen to invest in the country.

Top 10 Business Ideas in Saudi Arabia

 

1. Real Estate Business in Saudi Arabia

With the continuous growth in Saudi Arabia’s population, the demand for housing and other structures has also gradually increased. It creates various opportunities for real estate investors in the Saudi Arabia.

 

2. Education Business in Saudi Arabia

The Saudi government supports and encourages investing in new educational institutions and training courses for the students of Saudi Arabia. With increasing affairs between Saudi Arabia and foreign countries, there is a substantial need for Saudi nationals to understand the English language to avoid language barriers in their interactions with foreign countries beyond the Middle East.

 

3. Agriculture Business in Saudi Arabia

The Saudi Arabia’s harsh weather conditions and soil may not provide substantial food crops. Although, there are a few food crops can still survive the country’s harsh conditions. They include date palms, barley and wheat. The demand for these crops is considerably higher than the production, which therefore makes it a great opportunity for cultivating these crops.

 

4. Technology Business in Saudi Arabia

Substantial investments in infrastructure, health and education sector have paved the way for innovative technology and security systems. There is an increase in demand for the latest, cutting-edge technology in both the consumer and enterprise markets. Importing and exporting of such technology is an excellent opportunity to meet the country’s rising demand.

 

5. Healthcare Business in Saudi Arabia

The growth of Saudi’s populations also increases the demand for healthcare services in the country. There are various opportunities in the healthcare sector including medical research and examination, education, provision, amenities and compensation.

 

6. Luxury Goods Business in Saudi Arabia

Due to the high purchasing power of the Saudi royals and citizens, the business of luxury goods and services is a highly profitable trade sector in the country.

 

7. Building Materials Business in Saudi Arabia

The high real estate demand has a direct effect on the new buildings and structures erected in Saudi Arabia. It will increase the demand for building materials, therefore creating a significant opportunity for manufacturing and selling the required materials for construction.

 

8. Professional Services Business in Saudi Arabia

There is a constant demand for professionals in the engineering, financial and medical sectors. Individuals with proficient backgrounds can offer specialised services in the country to meet the growing demand.

 

9. Processed Foods Business in Saudi Arabia

The scarce availability of fresh foods in KSA creates a high demand for processed foods and food products. Processing fresh foods or importing processed foods can be a valuable business opportunity for fulfilling the ever-growing need in the country.

 

10. Solar Energy Business in Saudi Arabia

Saudi Arabia’s hot climate is the ideal environment for the production of solar energy. The government encourages solar power investment to divert from fuel combustion to solar energy as their source of electricity. Investment can be made in the solar power sector including the sale of solar panels, production, solar installations, and so on.

GCC Solutions provides company formation services as an approved service provider for Saudi Arabia. We provide our clients with turnkey SAGIA company formation services including preparation and submission of all required documents to all relevant government ministries and authorities.


 

New KSA Companies Law – Significant Changes to JSCs and LLCs

New KSA Companies Law – Significant Changes to JSCs and LLCs

 

New KSA Companies Law

Saudi Arabia’s new Companies Law (1437H / 2015G) was published on November 9th, 2015 by the Ministry of Commerce and Industry (MoCI). It was distributed in the Saudi Gazette on December 4th, 2015, and came into effect on May 2nd, 2016. The new Companies Law has completely replaced the old Companies Law that was launched over fifty years ago in 1965.  It provided companies with a period of one year from its effective date to make necessary changes to comply with the new Companies Law.

Key innovations made by the new Companies Law are:

  • Partnerships limited by shares, Cooperative Companies and Variable Capital Companies have been removed from the Companies law and are no longer permitted as they were rarely used. Principal forms of commercial entity used will remain to be Joint Stock Company (JSC) or Limited Liability Company (LLC).
  • The most substantial change in the new Companies Law is that Limited Liability Companies (LLCs) can now be established with a single shareholder, replacing the current requirement for a minimum of two shareholders.
  • There are certain provisions introduced to administer the formation of a holding company for regulating LLCs or JSCs holding more than 50% of their capital. Such a holding company is required to consist of the word “holding” in their name and produce annual consolidated monetary accounts.
  • A minimum of two shareholders is needed to form a JSC, which is reduced from the previous law’s prerequisite of five shareholders. JSCs can be formed with a single shareholder provided that it is established by the government or government-owned entities with a minimum capital of SAR 5 million.
  • JSCs share capital requirement has been reduced to SAR 500,000 when compared to the old law’s required minimum of SAR 2,000,000. LLCs remain to have no minimum capital requirement. There are certain exceptions when an LLC or JSC is foreign invested, the Saudi Arabian General Investment Authority (SAGIA) may implement a higher minimum share capital requirement.
  • Another significant change in LLCs is the removal of the provision when shareholders are mutually liable for the debts exceeding 50% of the capital’s losses, and no action is taken to recapitalise or liquidate the establishment. The new law provides termination of the corporation if the managers or directors take no action.
  • Confidentiality is imposed on shareholders in regards to any information they obtain in their capacity as investors of a Limited Liability Company.
  • LLCs and JSCs are required to set aside 10% of net profits, although this is no longer mandatory once the statutory reserve achieves 30% of the share capital. This has been reduced compared to the previous law’s 50% share capital requirement.
  • If the number of an LLC’s shareholders increase beyond fifty, then the LLC will be required to undertake conversion to a JSC.
  • Joint Stock Companies will be authorised to acquire or pledge their total shares.
  • Negotiable debt instruments are allowed to be issued by JSCs.
  • Recognition of modern methods of communication is present for the intention of running shareholder meetings.

With several new procedural and regulatory changes affecting KSA corporations, it is imperative that prevailing businesses and new investors ensure they are fully aware of the changes. Companies have to evaluate how they are conducting their undertakings and procedures to carry them in line with the new law.