Saudi Arabia has become, in recent years, one of the best places to establish a company. This is because it has one of the largest economies in the Middle East, and an excellent platform for global business. In addition, you can get opportunities for the establishment of an offshore company in Saudi Arabia, thanks to the newest government policies.
In this article, we will provide you with a list of steps you need to complete when setting up a business. Also, we will describe the main characteristics of the commercial entities that you can establish in the territory. Let us see:
1. What are the characteristics of an offshore company in Saudi Arabia?
2. How can you set up an offshore company in Saudi Arabia?
3. What are the types of businesses you can establish?
4. How can we help you set up an offshore company in Saudi Arabia?
1. What are the Characteristics of an Offshore Company in Saudi Arabia?
With the establishment of an offshore company in Saudi Arabia, you can create your business outside the jurisdiction of your operations. Also, these types of offshore companies have the benefit of joining for services and all the lower rates. You must comply with all regulations of the mentioned jurisdiction but you must not trade within the jurisdiction.
Some of the advantages of an offshore business stabare:
- It is easier to set up and maintain a business, as there are fewer obstacles.
- Company owners can remain anonymous, as their names and that of the directors are not public records.
- Your company is legally protected as long as you comply with all the laws of the nation.
- Another advantage of a company formation in Saudi Arabia is the protection of your assets through their organization.
2. How can you set up an offshore company in Saudi Arabia?
Before you can establish a company in Saudi Arabia, you must take into account certain aspects. You can then be guided through the following checklist to establish your company in the nation.
2.1 Planning
The first step is to prepare a detailed plan with each of the aspects that will govern your business. During this phase, you must establish the following fundamentals:
- Define the name that your business will have.
- You must have established the type of business entity that you are going to establish in the territory.
In this case, one of the most common entities is a Limited Liability Company that a single shareholder can register. Likewise, you can also register a Branch or a Limited Company. We will cover this later.
2.2 Incorporate the company into the market
The next step is to start the company incorporation process. To do this, you must follow the steps described below:
2.2.1 Getting an investment license
This is one of the essential requirements for all non-CCG foreign investors. In addition, to obtain this license, you must submit your application to SAGIA. The Saudi Arabia General Investment Authority (SAGIA) is exclusively responsible for granting this license.
In this way, any foreign company can carry out its operations within the territory of Saudi Arabia. To do this, you must submit a report detailing all the information concerning the establishment of the company. Therefore, for an offshore company in Saudi Arabia, you must define the commercial activity to carry out, as well as the financial information.
Likewise, you must fill out a series of application forms issued by SAGIA, which will be submitted later. Next, the institution will issue a pre-approval certificate so you can register. This will serve to determine whether or not your company can have 100% foreign ownership.
2.2.2 Articles of Association
The Articles of Association (AoA) must be submitted to the Ministry of Commerce and Investments. In addition, after you received their approval, you must sign it before a notary public. You can register for the CR certificate, then the name and AoAs must be published in the newspaper.
2.2.3 Register the company name
When you are setting up a company in Saudi Arabia you must reserve the company name at the Unified Center. Also, the name must be approved before you can continue to submit the other forms. The latter include the incorporation, the Articles of Association, and the deeds of establishments.
2.2.4 Register in MERAS
MERAS is a program the government established to facilitate these procedures and assist in conducting business. In this way, the government of Saudi Arabia allows efficiency and ease in creating companies. Thanks to this, many of the procedures are now easier and several can be completed online.
The first thing is to obtain the Commercial Registry (or CR), which is the business license to be able to operate in the nation. Additionally, companies must obtain a tax identification number. In the first case, it must be presented within 30 days from the date the Articles of Association were registered before the notary public.
Likewise, when you are setting up business in Saudi Arabia, you must include the following in the CR application:
- Type of company and its name.
- Business activity.
- Capital of the company.
- Constitution date.
- Personal data of the partners.
- The complete data of the administrators and the signatories.
- Statement of the scope and limitations of the powers of the aforementioned personnel.
- The address of the places where the company has its base, branches, and/or agencies; inside and outside of the country.
In addition, all registered individuals must deposit a membership certificate with the Chamber of Commerce and Industry. They must do so within 30 days from when the company was registered. Similarly, registration must be done with the Ministry of Commerce and Industry of Saudi Arabia (MOCI).
The Commercial Registry will be issued in about 6 weeks and at the same time, you can register for taxes. Likewise, you must register your company in the municipality and establish a physical office in said location. You will also need to register your offshore company in Saudi Arabia with the different ministries and legal entities.
2.2.5 Foreign trade license
To obtain the license from SAGIA, you must submit, for review and approval, the following documents:
- The Commercial Registry.
- Tax registration.
- City license.
- Letter of deposit of capital stock from the bank.
Consequently, SAGIA will issue the license that allows your business to sign contracts, issue invoices, and hire employees. In this case, we are talking about the foreign investment license for a company formation in Saudi Arabia.
2.2.6 Business seal
Legally, the seal of your organization must include the Commercial Registry number and the company name. This process is necessary for your business to attest to all signatories at the Chamber of Commerce. It also serves to register with the General Organization of Social Security and invoices.
2.2.7 Register with the Chamber of Commerce
When you are setting up a company in Saudi Arabia, you must present the Certificate of Membership issued by the Chamber of Commerce and Industry (CCI). Moreover, you must do so within 30 days from the date of registration of the Commercial Registry.
2.3 Open a bank account
You must open a bank account at a local bank within three months of receiving the business certificate. Likewise, this process can be carried out in any bank that offers you what you need. In this way, when you get the certificate, you can activate your account and unfreeze the capital deposit.
In addition, the offshore company in Saudi Arabia must open a capital account to deposit the required for the process. However, said account will become commercial once the company registration number is issued. For your benefit, you can find banks in Saudi Arabia that offer online services in English to make the process easier.
There is also the possibility of opening an account digitally through a form designed for this purpose. Then, you must authenticate it through the IAM National Platform on the corresponding website. In addition, you can obtain a share capital deposit certificate.
2.4 Maintain compliance
When you are setting up business in Saudi Arabia, you must ensure that you maintain both accounting and tax compliance. In this way, you can stay within the legislation of the country and stay away from fines and penalties. Also, foreign employees who are bank signatories must have a Saudi Employment Visa (Iqama).
In this case, the documents required to comply with said process consist of:
- Passport-sized photograph.
- Original and valid passport.
- Visa reference note.
- Sponsor letter from the Saudi Company.
- The highest academic qualifications.
- Work contract.
3. What are the types of businesses you can establish?
There are different types of business entities for people who want to establish an offshore company in Saudi Arabia. Following the Saudi Company Law, you can choose the following types of companies:
- General Partnership does not require a specific amount of capital; two or more partners share the general responsibilities of the company. Likewise, each one of the partners must answer for the obligations of the company to third parties.
- Limited Partnership is made up of general partners who respond to debts according to their assets. In addition, the limited partners respond to said debts according to the extent of their functions.
- With a company formation in Saudi Arabia, you can choose to have Saudi partners in a Joint Venture. An advantage of this is that they have a greater eligibility for a loan of up to 50% of a project.
- In the case of Join-Stock Company, this requires a minimum of five shareholders who can be natural or legal persons. However, this type of business entity could be considered the most regulated in Saudi Arabia.
- A Limited Liability Company (LLC) can develop commercial companies, services, etc. This is one of the most common options when setting up a company in Saudi Arabia.
- In the case of a Branch, it may be foreign-owned and carry out industrial or contracting work. Also, this concept was expanded to include other companies that do not carry out the above works, although they are rare.
- Representative offices can be Technical and Scientific Offices (TSSO), or Temporary Company Registries (TCR). The first provides technical support to manufacturers, while the second is to obtain a government contract.
4. How can we help you set up an offshore company in Saudi Arabia?
The process of establishing an offshore company in Saudi Arabia can be complicated if you do not know where to start with the required procedures. For this reason, we share with you in detail each of the elements to fulfilled, so you can have a clearer idea of how to begin, and the business entities that could best suit your needs.
On Company Formation Saudi, we offer you the necessary tools to make the process of establishing your company simple. We have the privilege of offering the services of the most experienced specialists in the Kingdom of Saudi Arabia. Not only will we help you begin your commercial operations, but we will also serve you as the best legal consultants for your company.
In the same way, we can offer you a comprehensive payroll service to implement in your startup business, making its HR management more efficient.
Do you want to obtain more information about business setup services in Saudi Arabia? You can always contact us by making a call at +971 43 316 688, and our team will happily walk you through the steps you need to take to open your new business. In the same way, you can also get in touch by emailing us at contact@companyformationsaudi.com.