Applying for the SAGIA license is a simple process and has many benefits if you are starting a business in KSA. This license is very important to carry out your commercial operations without legal inconveniences of any kind. Currently, it has changed its name from SAGIA to MISA but retains the same attributes as its previous name.
In this article, we will detail how to get SAGIA license, as well as its importance. In addition, we will show you what the process is like to establish your company in Saudi Arabia.
Importance of SAGIA License for Business in KSA
The MISA license, previously called the SAGIA license, is the one that allows the beneficiary to have full ownership of a company in Saudi Arabia. Likewise, you may not need sponsors in the country and you will not have capital restrictions either. This means that you will receive control of all trading actions and all profits.
Furthermore, it is an attractive option for any foreigner wishing to invest in a Saudi Arabian company.
Types of companies in Saudi Arabia
To receive the SAGIA license for a company, you will need to register it and choose what the business structure of the company will be. Generally, there are four types of companies that you can register according to the Ministry of Commerce of Saudi Arabia:
Limited Liability Company (LLC)
To enter the Saudi market, investors from abroad often choose a Limited Liability Company or LLC. Thus, this company limits the liability of the shareholders to the contribution to the share capital. Likewise, it is of a legal type, very popular among investors from other countries and widely used in Saudi Arabia.
As we have mentioned before, the Ministry of Investment of Saudi Arabia or MISA will allow you control of your company even if you are a foreigner. This means that with the SAGIA Entrepreneur License, you will be able to have 100% full control of your business in KSA.
Joint Stock Company (JSC)
A Joint Stock Company is the most traditional type of company in terms of the regulatory requirements for its constitution. In addition, it has a degree of control and participation by the Ministry of Commerce and Industry known as MOCI. In addition, the liability of participating shareholders of the JSC is limited to the contribution of the share capital.
Limited Partnership Company (LLP)
The LLP is the society for those foreign entrepreneurs who need to familiarize themselves with the Saudi Arabian business market. This is because the structure they have requires 2 members which is a good path towards residence. This type of entity is the best for individual investors who wish to reside in the country.
To create a society of this style, you must know its main characteristics, which are the following:
- The company needs at least 1 director
- Of the incorporated partners, one of them must be the general partner and the other a limited partner.
A joint venture is an alliance between 2 or more partners for commercial purposes that will share markets and intellectual property. Also, this includes assets, knowledge, and profits as well as losses in general. A joint venture is different from a merger in that there are no transfers of ownership in this operation.
Likewise, foreign partners that make up a joint venture may have 100% of the share capital. However, they will need to have a local partner who owns 50% or more of the share capital, which is a great advantage in many ways. An example of this is that this company will be eligible for loans without interest payments of up to 50% of the cost of the project.
Additionally, you can return it in 10 years. Below are the most relevant characteristics of this type of joint venture in Saudi Arabia:
- Two companies come together for a temporary agreement that will help them get out of business problems.
- Businesses create partnerships with their particular skills, which are used to improve efficiency in the joint venture.
- The projects or joint ventures are of short duration, which allows them to solve some inconveniences.
- Likewise, the co-participants will collaborate with their resources both physically and humanly to promote the project. In this way, they will achieve the objectives set for which the company was formed.
The parties of a joint project have financial purposes as well as the risks that may arise. Also, if the joint venture is profitable, the profits are shared with an awareness of the risk. Moreover, the partners share the burden among themselves according to the terms they have agreed when founding the joint project.
SAGIA license benefits for company formation in Saudi Arabia
Having the SAGIA license is the best way to enter the Saudi Arabian market. In addition, the advantages of the MISA license for the formation of Saudi companies are as follows:
- The process is fast and fluid. The process to obtain a SAGIA certificate is quick and streamlined, allowing you to set up your business in a matter of weeks.
- Complete property. With a SAGIA license, you will be the sole owner of your business. This will allow you to make choices without the need for the involvement of local partners.
- Access to loans. When you are the holder of a MISA OR SAGIA license, you will be able to apply for loans throughout the country. In this sense, you will be able to open new paths for business growth.
- No repatriation limits. You will not have income limits, which you can repatriate, which will give you more earnings that you can reinvest in your company.
- You will not need a local sponsor. With a license, you can do your business operations without the intervention of a local investor.
Steps to register SAGIA license for business in Saudi Arabia
The first thing to do before starting the SAGIA license application process is to know the steps to follow to register it. For example, you must define what type of business you want to establish, as well as the activities you will carry out. In addition, you must define whether you want to settle on the mainland or in a free economic zone.
This will allow you to know the type of license you need, as well as the legal entity of those allowed by the authorities. In this case, you will have a better understanding of the setup for an in-country business before starting the following steps:
Reserve a company name
The next step in the registration process is to reserve the company name with the Ministry of Commerce and Industry. Likewise, the validity period for the name is 2 months and you can do it through the website of said ministry. Also, you must take into account the rules established for the choice of a valid name.
Apply for Investment License at SAGIA
To start a business in Saudi Arabia as a foreigner, you will need to apply for an investment license. You will get it form the Saudi Arabian General Investment Authority or SAGIA. Therefore, with the SAGIA license, you can do various business operations.
These operations range from investing, buying, establishing a company, or simply opening a branch of an existing business in another country. In addition, at this stage, you must apply for the commercial registration certificate issued by the Ministry of Commerce and Investment. In the same way, you must cover the SAGIA license fees established for this purpose.
Submit Legalize Documents
For the establishment application, you must have all the required documents. Generally, they include the articles of incorporation, the constitution of your business, and all the personal information of the relevant shareholders and directors of the company.
Set up an office & register in Commercial Registry
An important requirement in the process in Saudi Arabia is the registration of the address of your physical office. Additionally, once established, you must register with Saudi Post (SPL). This will be registered as the official correspondence address of the business. It will also facilitate electronic commerce services as well as postal services.
On the other hand, you must complete the registration process at the Chamber of Commerce, in MERAS. In addition, you must acquire a foreign business license and create the seal of your business. The government program of the Business Center called MERAS facilitates the procedures and services for foreigners who want to do business.
Likewise, you must register your business in the Chamber of Commerce after 30 days of registering to acquire the membership card. Additionally, you must request your SAGIA license so that your company can carry out its business without problems.
Finally, you must create the company seal to testify to the signatories before the Chamber of Commerce. In this case, this stamp will be used for official administrative purposes.
Register for taxes
Now, you need to register with the Zakat, Tax and Customs Authority or ZATCA before you can operate in Saudi Arabia. After registration, the business must comply with tax obligations. Thus, they include withholding tax and VAT payments, in addition to corporate income tax.
In addition, ZATCA has an online portal so that you can manage the activities that are related to taxes. In this portal, you can calculate and process the payment of tax withholdings and present VAT returns. You will also be able to calculate and pay business income taxes, in addition to being able to access customs services.
Additionally, you can pay the fees that have to do with the import and export of the company. Therefore, the website offers a complete solution to carry out the procedures related to taxes. This will ensure compliance of your business with the laws and regulations imposed in Saudi Arabia.
Requirements for setting up a Company through SAGIA
The SAGIA license requirements for the incorporation of a company through this government entity are the following:
- Certified copy of the business registration of the shareholder partner of the Embassy of Saudi Arabia.
- Copy of the national identity document of the member if he is a citizen of the CCG if his data is not registered in the ABSHAR system.
- The financial statements of the foreign company for the previous year, certified by the Embassy of Saudi Arabia.
Sponsorship requirements for certain sectors
You need to understand that in the country you can establish your business in various business sectors. In this case, some sectors and industries need to get some extra approvals in certain departments. However, this has to do with the restricted categories for foreign investors who want to operate in the country.
Hence, if you want to operate in any of the restricted sectors, you must apply for certain extra approvals. In other words, apart from the SAGIA license, you may have to obtain said approvals before or after obtaining that license. In addition, the sector or activity in which you establish your business will determine the permits that you must apply for.
For example, in some sectors, you will be able to have 100% ownership as a foreigner, while in others you will need a Saudi partner. If that is your case, you may have to turn over a certain percentage of your business to a local partner. Thus, the sectors included in this last aspect are the ones that we will name below:
- Construction or Engineering Project Management
- Insurance or Reinsurance
- Real Estate Financing
- Public transport
Thus, you need to take this into account to determine the type of business you want to register in Saudi Arabia. However, if you have difficulties in this regard, you can work with a specialist in company formation.
To establish your business in Saudi Arabia, you will need to apply for a SAGIA license known as a MISA license. This is a vital document to comply with the laws established by the authorities for this purpose. However, although it may take some time, the process is not difficult at all.
Therefore, if you want to establish yourself in one of the best-developing economies in the world, Saudi Arabia is a good choice. Also, if you have questions regarding the license or the process, you can contact us. In this way, you will be able to clear all your doubts and obtain the best advice for you and your business.