Top 9 Types of Business Licenses in Saudi Arabia

1. Top 9 Types of Business Licenses in Saudi Arabia The Ministry of Investment in Saudi Arabia issued a record 3,157 business licenses in Q1 2024, a 9% increase from the previous quarter and a significant jump from 351 licenses issued in Q1 2020. This surge reflects the government’s focus on economic diversification, with construction (864 licenses) and manufacturing (620 licenses) leading the way. Interestingly, the financial sector also saw 21 licenses issued, with big names such as the Rothschild & Co. opening an office in Riyadh. Moreover, the government is mandating regional HQs for foreign companies seeking contracts over $270,000.

2. Saudi Arabia’s businesses are experiencing a surge in licensing activity, fueled by several key factors. These factors directly connect to the nation’s ambitious economic transformation plans, let’s look at some of them: The Factors Contributing Towards Nation’s Ambitious Growth & Business Licensing In Saudi Arabia Vision 2030 Momentum: A recent government report underscores the success of Vision 2030, with 87% of its projects deemed “on the right track.” This positive progress signifies a thriving effort to diversify the economy beyond its traditional reliance on oil. This diversification, in turn, creates a growing demand for new businesses to support various sectors. Strategic Restructuring of Mega-Projects: While the Council of Economic and Development Affairs, led by the Crown Prince, convened to discuss potential adjustments to mega-projects due to budgetary pressures and rising interest rates, significant investment remains active. 1. 2.

3. This process may involve scaling back or reorganizing some projects but also presents new opportunities. New businesses can fill gaps created by these adjustments or contribute to revised plans. 3. PIF Secures Funding: The Public Investment Fund (PIF), the entity responsible for mega-projects, continues to secure funding. Recent successes include a $5.5 billion green bond issuance and plans for a $3.5 billion sukuk issue later this year. This continued access to capital ensures ongoing investment and fosters new business opportunities. 4. Adapting to Market Dynamics: A prime example of this adaptability is the recent announcement by Neom, a futuristic city project. Their initial vision for a 170 km horizontal city, “The Line,” has been revised to a more manageable 5 km length by 2030. This change highlights the focus on achieving progress even with modifications.

4. The Saudi economy is undergoing a dynamic transition towards diversification, as evidenced by the rising number of business licenses. This shift is driven by the positive momentum of Vision 2030, ongoing investment in mega-projects even with restructuring, and PIF’s continued access to capital. These factors combine to create a fertile ground for new businesses to flourish. Are You Ready to Join the Growth? Here Are the Top 9 Business Licenses in Saudi Arabia: If you are interested in being a part of this exciting economic expansion, Saudi Arabia offers a variety of business license options to suit your entrepreneurial aspirations. Here are nine distinct business licenses to consider for starting your venture:

5. 1. Service License: Catering to a wide range of service-based businesses, this license allows foreign companies to operate in sectors like restaurants, marketing, IT solutions, and general consultancy. Notably, foreign ownership of 100% is permitted. Requirements: Established business outside Saudi Arabia for over a year (not a sole proprietorship) Minimum capital of SAR 25,000

6. 2. Entrepreneurial License: Ideal for launching your innovative startup, this license streamlines regulations, reduces fees, and provides access to government support programs. However, specific criteria like a patented idea, venture capital backing, or endorsement letters are necessary. Requirements: Patented idea, VC backing, or support letter from a government entity (MISA, PIF, CODE, KAUST, TDF) Endorsement letter & MISA pre-approval

7. 3. Industrial License: This license empowers foreign companies to establish manufacturing facilities within the kingdom, with full ownership permitted. Requirements: Established business outside Saudi Arabia for over a year (not a sole proprietorship) Minimum capital of SAR 25,000 4. Agricultural License: Designed for foreign companies venturing into agricultural activities like farming and livestock production, this license allows for 100% foreign ownership. Requirements: Established business outside Saudi Arabia for over a year (not a sole proprietorship) Minimum capital of SAR 25,000

8. 5. Real Estate License: For foreign real estate development companies with projects exceeding SAR 30 million (excluding Mecca and Medina), this license is required. Contacting MISA directly for detailed requirements is recommended. 6. Trading License (Commercial License): This license facilitates import and export activities for foreign companies, with full ownership permitted. However, two options exist depending on your investment strategy: 100% Foreign Ownership: Requires three branches in different countries outside Saudi Arabia SAR 30 million capital injection in the first year SAR 170 million capital investment within the next five years in the Saudi company

9. 25% Saudi Partner: No branch requirement SAR 26,666,666 capital injection in the first year (minimum foreign capital share of SAR 20 million) No five-year investment obligation 7. Mining License: This license allows foreign companies to engage in mining activities within Saudi Arabia, with 100% ownership permitted. Requirements: Established business outside Saudi Arabia for over a year (not a sole proprietorship) Minimum capital of SAR 25,000

10. 8. Professional License: Foreign professionals seeking to practice in areas like law, taxation, consultancy, engineering, architecture, and advisory services can leverage this license. Interestingly, 100% ownership of a professional company is possible. Requirements: MISA Professional License (for specific consulting activities) requires a minimum of 25% local partner with relevant experience. Alternatively (Engineering Firms only): Four branches globally Share capital of one branch must be at least SAR 10 million A minimum of seven years of experience

11. 9. Special Consideration for GCC Nationals: Enjoying the same benefits as Saudi citizens, GCC nationals can establish a business with 100% ownership and a minimum capital of SAR 50,000. By carefully considering your business goals and aligning them with the appropriate license, you can unlock the exciting opportunities presented by the evolving Saudi Arabian market. Remember, conducting further research and consulting with relevant authorities can ensure a smooth application process and a successful business venture in the kingdom.

12. Taking the Next Step For in-depth information on these licenses and the application process, consider consulting with Safari Star – one of the leading company formation consultants in the region. With careful research and planning, our experts help you leverage the current economic climate in Saudi Arabia to establish and grow your business to the fullest. For more information or to book a free consultation with an expert, contact us today!