How to Open a Business in Saudi Arabia
Saudi Arabia can be a challenge to open a business, but it can be done relatively efficiently with careful planning and execution. Saudis are eager to develop partnerships with Western companies. Saudi Arabia joined the World Trade Organization in 2005 and has since revamped many of its commercial laws to be more business-friendly for foreign companies. A Saudi must sponsor foreign companies to start a business. And like any fledgling company trying to establish itself, a well developed business plan and sufficient funding must be presented to Saudi investors.
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Instructions
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Research Saudi Arabia. Have a working knowledge of Islam. Islam is the law of the land and businesses must be Shariah (Islamic law) compliant. Study market conditions in Saudi Arabia and have a well-developed sense of the competition. Be prepared to present a thorough business plan and evidence of funding (See References 1-2).
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Find a Saudi sponsor. Every business in Saudi Arabia must have a Saudi sponsor who will hold a majority interest in the company. This, in effect, allows the Saudi citizen to control the company. The Saudi sponsor is not required to invest any money in the business. This is not bad news. Saudis as a rule are astute businessmen and women and can effectively help run a company. By the same token, many Saudis lend their name only to the business and have a hands-off policy in company operations (See References 1-2 and Author’s Expertise).
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Research Islam as well as Saudi customs and traditions. Saudis feel more comfortable and are willing to take more time with potential partners who demonstrate familiarity with Islam. Be aware that Saudis are skilled negotiators and rarely accept business plans at first blush. Saudi businessmen and businesswomen will go through your business plan with a fine-tooth comb (See References 2-3 and Author’s Expertise).
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Have your Saudi sponsor invite you to the country. Businesspeople require an invitation from the potential sponsor and a business visa issued by the Saudi Embassy or consulate for entry. (References 1-3 and Author’s Expertise).
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Register your business with the Saudi Ministry of Commerce and Industry. This will take about five days. Open a Saudi bank account. Register with the Saudi Department of Zakat and Income Tax. Zakat is an Islamic charitable donation, or fee, that businesses must pay (See Reference 2).
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Tips & Warnings
Avoid attempting to start a business during Ramadan, which is a month-long Islamic holiday followed by Eid. Eid lasts another 10 days. Ramadan and Eid occur on the lunar cycle and are celebrated at different times each year.
Ramadan is a time for fasting for Saudis. Most government offices and business operate on limited schedules during this time, and business is difficult to transact.
Hire a lawyer versed in Shariah and Saudi commercial law. Don't trust your layman's judgment of Saudi law.
References
Resources
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