Saudi Arabia’s expansive market, coupled with its rich natural resources, unlocks a multitude of trade and investment possibilities for enterprises. Incorporating a Limited Liability Company, or LLC in short, is one of the alternatives that is most explored. In addition to various other advantages like tax relaxations, foreign investment possibilities, easy access to the local market, and much more, it gives businesses the opportunity to have multiple stakes in a company. This blog focuses on LLCs in Saudi Arabia, including setup procedures, prerequisites, and advantages.
What is a Limited Liability Company (LLC) in Saudi Arabia?
A Limited Liability Company (LLC) is a corporate structure that can be established in Saudi Arabia with one to fifty shareholders, entities, or a combination of the two. Due to its ability to protect private assets from the needs and obligations of the business, this structure is particularly appropriate for small and medium-sized enterprises (SMEs).
Requirements for LLCs in Saudi Arabia
It is essential to comprehend the qualifying standards and adhere to them before starting the process. This will greatly simplify the setup procedure. Among the fundamental prerequisites are (but not limited to)):
- A minimum capital of SAR 50,000 (approximately USD 13,624).
- The minimum capital required for an LLC with foreign involvement is SAR 26,666,667, (approximately USD 7,000,000). The foreign partnership must not hold more than 75% of the shares, and the foreign capital shareholding cannot be less than SAR 20,000,000 (approximately USD 5,332,000).
- An LLC that engages in 100% foreign trade must have a minimum capital of SAR 30,000,000, which is equivalent to approximately USD 8,000,000.
- In Saudi Arabia, an LLC firm must be established with a minimum of two shareholders and a maximum of fifty shareholders. It must also be controlled and represented by one or more managers.
Process of Setting up an LLC in Saudi Arabia
Gatestone Group will assist you with the following steps to set up an LLC in Saudi Arabia:
- Prepare the company’s incorporation documents, which should also include a business plan, company name, logo, shareholder details, etc.
- Choose a name for your company and obtain approval.
- Then register with the Ministry of Investment (MISA).
- Obtain a commercial registration (CR) licence.
- The next step is opening a corporate bank account for your company’s funds and depositing the required capital. Also register for a national address and fulfil other post-incorporation requirements.
- Register at the local municipal office and tax authority.
Benefits of LLC in Saudi Arabia
A common choice for a legal form when establishing a business in Saudi Arabia is an LLC. Following are some of the main advantages of incorporating an LLC in the Kingdom:
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Limited Liability
Limited liability is provided to the shareholders by an LLC, and this is regarded by many businesses as an essential characteristic. This protects the stockholders’ personal assets from the liabilities of the firm.
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Flexibility
Saudi Arabia has made great efforts to attract international investors to its enterprises and industries. Foreign investors may find it to be an attractive opportunity due to the moderate laws and regulations established by the Ministry of Investment Saudi Arabia (MISA). This covers the adaptability of the ownership and management frameworks provided by Saudi Arabian LLCs.
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Accessible local market
There are great opportunities in the local market that aid in the growth of your business by allowing participation in government tenders and contracts.
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Relaxation on taxes
Entrepreneurs are offered tax relaxations on various taxes; for instance, double tax, corporate, and zakat are some of the examples. Below is a breakdown:
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Saudi Arabia has set up tax agreements with numerous countries. This will help certain foreign companies reduce their tax burden on the same income.
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The current corporate income tax rate of 20% is implemented for high-profit businesses. This means SMEs may enjoy reduced tax rates.
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Zakat, which is an obligatory Islamic levy on wealth, is typically applied at a rate of 2.5% on the company’s net profit. Businesses with Saudi or GCC nationals may enjoy certain exemptions and incentives.
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100% foreign ownership
LLCs in most sectors allow 100% foreign ownership without the need for a local sponsor.
Conclusion
Starting an LLC in Saudi Arabia can be a great start to tap into the kingdom’s ever-flourishing economy. It is essential to carefully go through all the requirements and steps involved.
If you are considering forming an LLC in Saudi Arabia, Gatestone Group can help you navigate the process, from understanding the legalities to getting the necessary licences. Our expert team will be with you every step of the way to ensure a smooth and successful launch.
Let Gatestone Group be your guide to unlocking the exciting opportunities that Saudi Arabia has to offer! Contact us via email [email protected] or +971 4 450 1023.
FAQs
An LLC in Saudi Arabia is required to have a minimum share capital of SAR 50,000 (approximately USD 13,300) that must be deposited with a local bank and can be used as working capital. For certain activities, MISA has set different minimum capital requirements. To learn more about the minimum capital requirement for your industry, contact Gatestone Group via email at [email protected] or +971 4 450 1023.
Indeed, foreigners are welcome to establish their businesses and begin operations in Saudi Arabia. Recently, the Saudi Arabian government has implemented several measures aimed at facilitating foreign entrepreneurs’ establishment and operation in the nation, including full ownership. For more information, email [email protected] or +971 4 450 1023.
