Steps for establishing a foreign company as a subsidiary in Saudi Arabia

1. Prepare Required Documents:

Collect and prepare the necessary documents for the application process. These typically include:

Board resolution approving the establishment of the subsidiary.

Parent company’s incorporation documents (Articles of Association, Certificate of Incorporation, etc.).

Copies of the shareholders’ passports.

Financial statements of the parent company for the last year (audited).

Power of attorney (POA) granting authority to the individual managing the registration process.

Legal translation of documents into Arabic, attested and notarized.

Note: Some documents may require attestation from the Saudi embassy in the parent company’s country.

2. Obtain Initial MISA Approval:

Submit the prepared documents to MISA (Ministry of Investment of Saudi Arabia) to get approval for establishing the subsidiary.

MISA will review the application and ensure compliance with foreign investment laws.

Once approved, MISA will issue an Investment License that allows the subsidiary to operate in Saudi Arabia.

3. Register the Company with the Ministry of Commerce:

After obtaining the MISA investment license, the subsidiary must be registered with the Ministry of Commerce.

Draft Articles of Association (AOA) for the subsidiary in Arabic.

Submit the AOA to the Ministry of Commerce, where it will be reviewed and notarized.

4. Open a Bank Account:

Open a bank account in Saudi Arabia in the name of the subsidiary.

The company’s capital must be deposited into the bank account (the amount depends on the type of business and its structure).

Obtain a bank certificate proving the capital deposit.

5. Register with the Chamber of Commerce:

After the company is registered with the Ministry of Commerce, it must register with the Saudi Chamber of Commerce.

This step provides the company with membership and access to resources provided by the Chamber.

6. Obtain a Commercial Registration (CR):

The subsidiary must obtain a Commercial Registration (CR) from the Ministry of Commerce.

The CR is an official recognition of the company's legal existence in Saudi Arabia.

7. Register with the General Authority of Zakat and Tax (GAZT):

Register the company with the General Authority of Zakat and Tax (GAZT) to obtain a tax number.

Foreign companies are subject to a corporate income tax in Saudi Arabia.

8. Register for VAT (If Applicable):

If the company’s revenue exceeds the VAT threshold, it must also register for Value Added Tax (VAT).

VAT registration is mandatory for businesses that meet the criteria.

9. Obtain Necessary Licenses:

Depending on the industry and the business activities, additional licenses or approvals from other government bodies may be required.

For example, a healthcare company would need approval from the Saudi Food and Drug Authority (SFDA).

10. Lease Office Space:

A subsidiary must have a physical office in Saudi Arabia.

Sign a lease agreement and register it with the Ejar system (the official rental agreement platform).

11. Hire Local Staff:

Saudi Arabia has strict Saudization (Nitaqat) laws, which require a certain percentage of the workforce to be Saudi nationals.

Register employees with the General Organization for Social Insurance (GOSI).

12. Obtain Residency Permits (Iqama):

For foreign employees, obtain work visas and residency permits (Iqama) from the Ministry of Labor and the General Directorate of Passports.

13. Start Operations:

Once all registrations and approvals are in place, the subsidiary is legally allowed to start business operations in Saudi Arabia.

Additional Considerations:

Saudization Compliance: Foreign subsidiaries must comply with Saudization quotas, hiring a certain percentage of Saudi nationals.

Annual Renewals: The MISA license, commercial registration, and other permits must be renewed annually.

Zakat & Tax Filings: Subsidiaries are required to file Zakat and tax returns with the General Authority of Zakat and Tax (GAZT) annually.

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