Table of Contents
Introduction
Licensing is at the heart of any successful company setup in Saudi Arabia. The Kingdom’s shift towards business liberalization and economic diversification under Vision 2030 has made the licensing process more streamlined, but it remains layered and nuanced. Foreign investors must interact with multiple regulatory authorities to obtain sector-specific approvals, business licenses, and post-registration compliance certifications.
In this article, we break down the key regulators you’ll encounter during the incorporation journey: Ministry of Investment of Saudi Arabia (MISA), Ministry of Commerce (MoC), Zakat, Tax and Customs Authority of Saudi Arabia (ZATCA), Chamber of Commerce, General Oranisation for Social Insurance (GOSI), Ministry of Municipal and Rural Affairs (MOMAH), and various sector-specific regulators, explaining what they do and how to navigate their requirements efficiently.
This blog is a part of our Setting Up a Business in Saudi Arabia blogpost.
Ministry of Investment of Saudi Arabia (MISA)
Formerly known as SAGIA, the Ministry of Investment of Saudi Arabia (MISA) is the first authority foreign investors need to deal with. MISA issues the Foreign Investment License, which legally allows a non-GCC individual or entity to own equity in a Saudi business.
Key Roles of MISA:
- Reviews and approves investment applications.
- Issues Foreign Investment Licenses (FILs).
- Maintains the “Negative List” of restricted sectors.
- Oversees investor rights and facilitates dispute resolution.
- Offers guidance to international businesses entering the Kingdom.
Licensing Process:
To obtain an MISA license, investors typically need to submit:
- Company profile or commercial registration of the parent company.
- Financial statements for the last fiscal year.
- Business plan outlining the proposed activities in Saudi Arabia.
- Passport copies of owners and managers.
- Legalized Power of Attorney and Board Resolution (if a foreign company).
Once issued, the MISA license enables further incorporation steps, such as commercial registration with the Ministry of Commerce.
MISA also provides a one-stop investment platform that allows for some applications to be submitted electronically, although document legalization and in-country visits may still be required.
Ministry of Commerce (MoC)
After obtaining the MISA license, the next step is to register the company with the Ministry of Commerce (MoC) to obtain the Commercial Registration (CR). The CR is the legal backbone of your business, it allows your company to operate, sign contracts, hire employees, and open bank accounts.
Key Roles of MoC:
- Maintains the national commercial registry.
- Issues and renew Commercial Registration (CR).
- Oversees corporate governance and Articles of Association (AoA).
- Authorizes company name reservation and trademark protection.
Requirements for CR:
- MISA license (for foreign investors).
- Approved company name.
- Drafted and notarized Articles of Association.
- Payment of CR fees.
- Appointment of general manager and board members (if applicable).
The CR must be renewed annually. MoC also plays a regulatory role in dispute resolution and shareholder rights under the Saudi Companies Law.
Zakat, Tax and Customs Authority (ZATCA)
All entities, whether local or foreign, must register with the Zakat, Tax and Customs Authority (ZATCA) for tax compliance purposes. ZATCA (formerly GAZT) issues a Tax Identification Number (TIN) and manages Zakat and VAT filings.
Key Roles of ZATCA:
- Administers Corporate Tax, Withholding Tax, Zakat, and VAT.
- Enforces electronic invoicing (E-invoicing) compliance.
- Conducts audits and investigations.
- Issue certificates for tax residency and contract clearance.
Foreign-owned companies typically pay Corporate Tax at 20% on net profits. Zakat (2.5%) applies to Saudi/GCC-owned equity portions. VAT registration is mandatory for companies with annual revenue exceeding SAR 375,000.
Filing and payments are done via ZATCA’s online platform, but companies must maintain local bookkeeping and digital records in Arabic.
Chamber of Commerce
The Chamber of Commerce is a semi-governmental body that authenticates business activities and represents the private sector. Registration with the Chamber is mandatory after obtaining the Commercial Registration.
Key Roles:
- Verifies corporate documents.
- Issues with Chamber certificates required for tenders, visa applications, and customs.
- Conducts trade-related workshops and events.
- Supports dispute mediation.
Every major city (e.g., Riyadh, Jeddah, Dammam) has its own Chamber. Annual membership fees apply, and renewal is required alongside CR renewal.
Municipality (Baladiyah)
Depending on your business activity and office location, your company may need a Municipal License (also known as a Baladiyah license) from the local municipality. This is particularly important for companies with physical premises, offices, warehouses, stores, or factories.
Key Requirements:
- Commercial lease agreement.
- Building safety certificate and civil defense approvals.
- Location zoning compliance.
- CR and Chamber certificate.
The Municipality may inspect the premises before issuing the license. Activities such as food and beverage, manufacturing, or logistics are subject to stricter hygiene and safety protocols.
GOSI (General Organization for Social Insurance)
If you plan to hire employees in Saudi Arabia, registration with GOSI is mandatory. It manages social insurance contributions, including pension and workplace injury benefits.
Employer Responsibilities:
- Register each employee (Saudi or expat).
- Deduct and remit contributions monthly.
- Maintain accurate payroll records.
Contributions vary by employee nationality. For Saudi nationals, employers pay 12% and employees 10%. Expatriate employees are only covered under occupational hazard insurance.
GOSI’s portal is integrated with the labor ministry’s systems (Qiwa, Muqeem) and is essential for issuing or renewing work permits.
Other Sectoral Regulators
Certain industries require additional licenses from sector-specific regulators before or after MISA approval. Examples include:
- Saudi Central Bank (SAMA): For financial services, fintech, and insurance.
- Saudi Food & Drug Authority (SFDA): For pharma, cosmetics, and food production.
- Communications and Information Technology Commission (CITC): For telecom and IT companies.
- Ministry of Health (MoH): For hospitals and clinics.
- Ministry of Tourism: For hospitality or tourism-related businesses.
Each of these authorities has its own application process, documentation requirements, and approval timelines. Working with a local consultant helps streamline multi-agency interactions.
Practical Tips for Navigating Licensing in Saudi Arabia
- Legalization is key: Foreign documents must be attested in your home country as well as attested by the Saudi embassy and the Saudi Ministry of Foreign Affairs.
- Hire a professional PRO service: This saves significant time and prevents procedural delays.
- Stay updated: Saudi regulatory bodies are evolving quickly, and digital platforms (like MISA’s Invest Saudi portal or MoC’s “Maroof”) are being frequently updated.
- Monitor timelines: Some licenses have expiry dates or must be renewed in coordination with CR or municipality licenses.
Key Takeaway’s
Successfully setting up a business in Saudi Arabia hinges on obtaining the right licenses at the right time from the right authorities. Each regulator plays a specific role, and missteps in sequencing or documentation can cause avoidable delays. A clear understanding of these bodies, from MISA to GOSI, empowers businesses to establish a compliant, operational, and scalable presence in the Kingdom.
ATB Corporate offers end-to-end support in handling licensing, document legalization, and compliance for foreign businesses entering Saudi Arabia.
🔗 Back to Pillar: Setting Up a Business in Saudi Arabia
Amy is a legal consultant at ATB Corporate, with a unique blend of skills for corporate, commercial and litigation matters. She is a law graduate and certified in Intellectual Property from the World Intellectual Property Organization.