Starting a Small Scale Business in Saudi Arabia for Expats

by Jayati Gadamsetty 04, Mar 2024

Saudi Arabia is teeming with opportunities. For expats looking to start a small scale business in Saudi Arabia, time is ripe.

But why should you choose Saudi Arabia?

  • The government supports small businesses, all the way from online retail to medical services. Saudi Arabia provides the perfect breeding ground for new ideas.
  • Has plenty of millennials and Gen Zs who are tech enthusiasts.
  • It's a rising economy.

Furthermore, the new changes have made the operations simpler, allowing investors from all around the globe to enter Saudi Arabia.

Table of Contents

This blog will guide you through the steps for starting a small business in Saudi Arabia.

Steps of Starting a Small Scale Business in Saudi Arabia for Expats

Expats who have full ownership of their business must apply for a business setup in Saudi Arabia. Let us cover the steps for setting up your small business in KSA:

  1. Picking a Business Activity and Industry

Selecting a business activity is essential for getting your license. Depending on the activity, you should choose between the Mainland and the special economic zones in Saudi Arabia. 

  1. Choosing a Business Site

In 2023, Saudi Arabia stopped issuing licenses to international companies not having a regional office in the country. You need to rent an office space or work with a local agent.

Choose between the mainland or special economic zones for starting your small scale business.

  1. Preparing the Documentation

For starting a small business in Saudi Arabia, the director/ shareholders must submit the required documents to the relevant authorities. You have the option to take the help of Commitbiz business experts for filing your documents.

Before discussing the documents, know this, building a small scale business in Saudi Arabia for expats will need a General Director.

  • Identity Proof.
  • Address Proof.
  • Letter from the bank.
  • Articles of Association (AOA).
  • Memorandum of Association (MOA).
  • Copy of the business name registration.

  1. Securing the SAGIA License (Investment License)

Every business person has to secure the business license sent out by the Saudi Arabia General Investment Authority (SAGIA). You also need to secure the Commercial Registration (CR) certificate from the Ministry of Commerce and Investment.

Obtaining these licenses will help you in starting your business in Saudi Arabia.

Running a Small Scale Business in Saudi Arabia Without a Local Sponsor

A common question is, can entrepreneurs run a business in Saudi without a local sponsor? The answer is yes. 

Upon securing the SAGIA license, expats will be able to do business without a local sponsor. Take the help of business consultants to navigate this process.

For starting a small business as an expat, it is necessary to submit the following documents -

  • Company registration certificate (from the origin country)
  • Passport Copy (for private or sole entrepreneurship)
  • Memorandum of Association
  • Reference Letter from Bank
  • Tax Registration Certificate
  • Articles of Association

Setting up a small business in KSA as an expat is going to be fulfilling. The pro-business environment in Saudi Arabia is helping small businesses thrive

Our advice is to enter the business world with complete preparation.

  • Understand the requirements,
  • Understand the environment,
  • Understand the licenses, etc.

Reach out to our consultants for setting up your small scale business in Saudi Arabia as an expat.

FAQs

Can expats legally own and operate a small business in Saudi Arabia?

Yes, expatriates can establish and run small businesses in Saudi Arabia. However, they must adhere to the legal requirements set by the Saudi government. Typically, this involves obtaining the necessary permits and licenses, as well as partnering with a Saudi national who acts as a sponsor or partner for certain types of businesses.

What are the common types of small businesses expats can start in Saudi Arabia?

Expats can engage in various types of small businesses in Saudi Arabia, including consultancy services, retail shops, restaurants, IT services, and trading businesses. The choice of business largely depends on factors such as market demand, available capital, and the individual's expertise. Conducting thorough market research and seeking professional advice can help expats identify the most suitable business opportunities.

What are the key legal and regulatory considerations for expats starting a small business in Saudi Arabia?

Expats must navigate several legal and regulatory considerations when starting a small business in Saudi Arabia. These include obtaining the appropriate business license from the Ministry of Commerce and Investment, registering with the General Authority for Zakat and Tax (GAZT) for taxation purposes, and ensuring compliance with labour laws and regulations when hiring employees. Additionally, expats should be aware of foreign ownership restrictions in certain sectors and the requirement for a Saudi sponsor or partner for certain types of businesses. Seeking guidance from legal advisors or business consultants familiar with Saudi laws and regulations is highly recommended.