Recently, the Kingdom of Saudi Arabia (KSA) has emerged as a land of new opportunities in business. This initiative has been led by the Vision 2030 strategy of the Kingdom, under which it aims to diversify its economy by reducing oil dependency. Many entrepreneurs and multinational companies are targeting the Kingdom as the most fertile region for expansion. However, to achieve long-term success, it is essential to understand the post-incorporation scenario in Saudi Arabia. This blog will therefore help you through the necessary processes and considerations after incorporating a business in Saudi Arabia, providing you with a roadmap to success in this dynamic market.
Post-Incorporation Checklist for Saudi Arabia
A company incorporated in Saudi Arabia is obligated to follow several post-incorporation compliances to ensure it is adhering to the local laws. These include, but are not limited to:
- Obtain a Certificate of Commercial Registration (CR)
- Obtain a licence from the municipality
- Apply for a corporate bank account
- Get visas and work permits for your staff
- Keep accurate accounting records that need to be examined by a local auditor
- Abide to the labour laws
- Renew permits and licences
- Avail Intellectual Protection (IP) services
- Register for VAT and file regular VAT returns if the business’s yearly revenue exceeds the threshold
- Hire the required staff for your company
Key Factors for Post-Incorporation Compliance in Saudi Arabia
The very moment your company gets incorporated within the country of Saudi Arabia, ensuring adherence to the requirements set forth by the locals will be primary. In Saudi Arabia, the Ministry of Investment (MISA) has been on the frontlines of facilitating foreign investments within its borders. All businesses must comply with MISA’s guidelines to maintain an operational status. Some of the main factors for consideration include:
- Licenses and permits renewal: Business licenses are usually renewed annually. Proper tracking of the dates of expiration and renewals may be done promptly to avoid any disruptions in the operation of the business.
- Zakat and tax compliance: In Saudi Arabia, companies remain liable for Zakat or religious wealth tax and corporate income tax. Proper declaration of return filing with the Zakat, Tax and Customs Authority (ZATCA) is necessary.
- Labour law compliance: All KSA labour laws, including Saudisation (Nitaqat) requirements, which compel a certain percentage of Saudi nationals in the workforce, shall be adhered to by the company.
2. Banking and Financial Management
A good banking and financial infrastructure must be put in place soon after incorporation. Carefully consider these crucial factors:
- Opening a corporate bank account: Go for a bank that has an excellent reputation and strong presence in Saudi Arabia. Be sure the bank provides services that your business will require, like online banking, foreign exchange, and trade financing.
- Accounting systems: Set up accounting software consistent with Saudi financial regulations to have proper account books, payroll management, and financial reporting.
- Securing funding and investment: This involves the evaluation of funding options like venture capitalists, private equity, and government grants. MISA provides a wide range of incentives to companies considered to be aligned to the goals of Vision 2030.
3. Building a Local Presence
Getting recognition in Saudi Arabia requires having a strong local presence. To make an informed decision, evaluate these essential elements:
- Office space and infrastructure: The office should be strategically located, taking into consideration proximity to key markets and business hubs. Modern office spaces are widely available, just like co-working environments and business centres.
- Local partnerships and networking: Local businesses and other relevant stakeholders’ relations could prove a valuable source of useful market information and may help unlock newer opportunities in business. Adding more to it, joining local business councils and chambers of commerce would provide one with more connections.
- Cultural sensitivity and local adaptation: It is of prime importance to understand and respect Saudi culture. It would be a good idea to engage in cultural training for your staff to have smooth interactions with local customers or partners.
4. Mastering Legal and Regulatory Changes
With a constantly changing Saudi Arabian regulatory environment, obtaining current information is more crucial than ever for compliance and strategic purposes. Following are some considerations when it comes to the legal aspect:
- Legal audits: Conduct regular legal audits to ensure that the operations are legally compliant and have adapted to such changes in local laws and regulations. Engage legal counsel familiar with Saudi Arabian business law.
- Keeping abreast of policy changes: Subscribe to updates from government agencies such as MISA, ZATCA, and the Saudi Central Bank to keep one abreast of changes in policies that are likely to have an impact on one’s business.
5. Talent Acquisition and Management
The success of a business in Saudi Arabia lies in building a skilled and motivated workforce. Important factors to keep in mind in terms of human resources include:
- Local talent hiring: Commence hiring local talent to achieve Saudisation and benefit from their market knowledge. Engage local recruitment agencies and job portals.
- Training and development: Spend money on training for your employees. Utilise the services of local educational institutions and offer them internships and other training opportunities.
- Benefits and retention of employees: Offer salaries and benefits that are competitive in the market to attract the best talent.
Post-Incorporation Process for New Companies in Saudi Arabia
The set of regulations about compliance for Saudi businesses is not uniform since it is frequently determined by the company’s legal structure, business model, and organisational structure. However, a new business in Saudi Arabia ought to adhere to the guidelines below:
- Finalise the registration process with the relevant Saudi Arabian government agencies
- To obtain the Chamber of Commerce (CoC) certificate, register with the Ministry of Commerce and Industry (MOCI)
- Register the business with government platforms such as Zakat, Tax and Customs Authority (ZATCA), General Organisation of Social Insurance (GOSI) and Ministry of Human Resources and Social Development (HRSD)
- Enroll the national address of the office
- Obtain a certificate in Civil Defense and Balady
- Make accounts in Sadad, Qiwa, Absher, Mudad, and other government portals
Conclusion
The opportunities and challenges in Saudi Arabia post-incorporation are immense. One requires the ability to be conversant with the regulatory environment, build a strong local presence, and adapt business strategies to navigate this market. Needless to mention, compliance with the local law and culture is of the essence.
Partnering with a company formation firm like Gatestone Group is always a good idea. We have a team of experts who can precisely tailor your post-incorporation needs and assist you in all aspects so your business can thrive.
FAQs
As the name suggests, post-incorporation refers to the processes a business has to carry out after the company’s registration process is over. It includes important tasks such as corporate banking, abiding by the laws, compliance checks, getting visas, etc.
Yes, foreigners are allowed to start their own business in Saudi Arabia with 100% ownership. However, this is not applicable for certain business activities, and the participation of a Saudi national will be required.
