Saudi Ministry of Investment Sets Minimum Capital Requirements for Foreign Companies

The Ministry of Investment in Saudi Arabia has unveiled new guidelines and minimum capital requirements for foreign companies looking to obtain licenses for wholesale and retail trade activities with full ownership in the Kingdom.

The Ministry’s Service Guide 2023 outlines the terms and conditions for foreign businesses interested in engaging in wholesale and retail trade or e-commerce with 100% ownership. One of the key provisions is that foreign companies must have a minimum capital of SR30 million (Saudi Riyals) to be eligible for the license.

In addition to the capital requirement, foreign companies must also demonstrate their presence in at least three regional or global markets. To prove this presence, they are required to submit their commercial registration for these markets, certified by the Saudi embassy in the respective countries, as well as the company’s balance sheet for the previous fiscal year, duly attested by the Saudi embassy.

Furthermore, if any of the company’s partners have previously been licensed by the Ministry, this information must be disclosed during the application process.

The Ministry has also emphasized the importance of Saudi employment, with companies expected to adhere to employment rates for Saudi nationals determined by the Ministry of Human Resources and Social Development. They must also develop and implement a program to appoint Saudi employees to leadership positions within the first five years and provide training to 30% of Saudi employees annually.

In terms of investment commitments, foreign companies have two options: either investing a minimum of SR300 million, including SR30 million of the company’s capital in cash, over a five-year period, or investing a minimum of SR200 million, including SR30 million in cash capital, over the same five-year period.

Moreover, within the first five years of operation, companies must meet one or more of the following requirements: a minimum of 30% of the company’s products distributed locally must be manufactured in Saudi Arabia, at least 5% of total sales must be allocated for research and development programs within the Kingdom, and a center must be established to provide logistics and distribution services, including after-sales services.

Financial fees are associated with obtaining the license. The initial fee for the first year is SR10,000 for subscription to services from the Investor Relations Centers at the Ministry of Investment, along with an annual fee of SR2,000 for up to five years. Subsequent annual subscription fees are set at SR60,000.

It is crucial to adhere to the payment deadline, as failure to make the payment within 60 days from the date of issuing the invoice will result in the cancellation of the service. In such cases, a new application must be submitted to obtain a new license.

These new guidelines and requirements are part of Saudi Arabia’s efforts to attract foreign investment and promote business growth in the Kingdom. They are outlined in the Service Guide 2023 issued by the Ministry of Investment and will have a significant impact on how foreign companies operate in the wholesale and retail trade sector within the country.