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How To Start An Online Business In Saudi Arabia?

The reforms that followed the announcement of the Kingdom’s Vision 2030 have opened limitless possibilities for expatriates to own and operate a business in Saudi Arabia. Petroleum has always been the primary revenue source in Saudi Arabia, but now things are changing; they are trying to gain by tapping into the unexplored territories.

Saudi Arabia has enhanced its internet penetration over the past few years; more than 67% of the population has access to the internet, resulting in increased online shopping and services. Mastercard conducted a study in 2014 which showed that nearly 50% of the surveyed preferred online shopping, and these numbers have been rising since then. 

Incorporating a business in Saudi Arabia right now could prove to be an edge over the competition and a rock-solid business move and especially an e-commerce business.

This guide will help you get a clear idea about setting up an online business in Saudi Arabia.

Steps To Start An Online Business In Saudi Arabia

  1. Consultation:

Setting up a business in an unknown jurisdiction can often be demanding and challenging. Understanding the legal language and trying to figure out all the legal compliance can be a tedious job.

Seeking the help of an advisor will help you sail through the entire process without much turbulence. Starting a business in Saudi Arabia can require multiple visitations at different official locations; an advisor can ensure that these appointments don’t become an unnecessary burden.

2.Company Name:

Deciding on a company name is one of the initial things you must choose before setting up an E-commerce company. A reservation can be made on Saudi Arabia’s website of the Ministry of Commerce and Industry.

This reservation will stay valid for two months. The name must be selected, keeping in mind the guidelines for choosing a company name set in place by the Saudi Arabian government.

3.Type of Company:

The management, capital, and liability structure that you plan for will help you determine the kind of company you will be choosing. Sole Proprietorship, a Limited Liability Company (LLC), a Joint Stock Company (JSC), a branch of a foreign LLC or JSC, etc., are some of the types you can choose from. This step is crucial because the company type you choose could have some separate set of formalities attached to it.

4.Obtaining Foreign Investment License:

An application must be submitted to the Saudi Arabian General Investment Authority (SAGIA) to get the license. The license generally arrives in 15-20 days. The cost of the license comes to SAR2,000 per year, and this license is issued by SAGIA for five years. Before the permanent license is given, a Temporary Investment License is issued for three months.

Note: SAGIA is not the only license required for starting an e-commerce business; the type and activity would determine what other licenses your company will need.

Generally, registration with the Ministry of Commerce and Industry, Chamber of Commerce and Industry, Ministry of Labour, and Tax Authorities are required before the company can start operating.

5.Approval of Documents:

Documents must be submitted for approval at the unified center (UC). For example:

  • Summary of the Articles of Association
  • SAGIA investment license
  • Identification proofs
  • Filled Application form
  • Confirmation Receipt of the reservation of company name

6.Notarization:

After the Articles of Association draft and all other documents get verified, the competent authority representing the company can carry forward with the process of legalizing the Articles of Association in the presence of a notary public. Several documents would be required at the time of notarization:

  • Original Articles of Association approved by the Ministry of Commerce and Industry
  • Copy of certificate of incorporation
  • Copy of SAGIA investment license
  • Copy of identification proofs of witnesses
  • Directorate of the company signed by the representatives or the shareholders

7.Opening a Bank Account:

For any business operation, having a bank account is a must; after getting legally notarized, a transfer of capital and funds can occur. Choosing the right bank is also important. Usually, it is done by aligning your business requirements with the different policies and benefits provided by various banks.

8.Establishment of Physical Office:

After all the compliances are met, and documentation is done, you should start searching for an office to kickstart operations and hire employees. It is essential to establish a physical place of work required to complete registration in the Commercial Registry.

9.Registration in the Commercial Registry:

Upon completing all the above-mentioned paperwork and setting up of office and opening an account comes this final step in the registration process. The Ministry of Commerce and Industry would require these documents from your:

  • Two notarized copies of the articles of association
  • A bank certificate that confirms payment of capital
  • Copy of SAGIA investment license
  • Office lease copy
  • Board Resolution from the shareholders confirming the appointment of their board members

10.Tax Registration:

It is mandatory for all Saudi companies and any branch of a foreign company to register with the Department of Zakat and Income Tax (DZIT). Zakat is a form of religious wealth tax levied in the kingdom. The calculation of this particular tax can be complicated at times, but for the most part, it is charged at 2.5% of the companies’ total capital resources. This process can take up to 3 days.

11.Social Insurance Registration:

This particular formality is done to register the employer and the employee with the two branches of the General Organisation for Social Insurance (GOSI):

  1. The Pension Fund
  2. The Industrial and Illness Fund

12.Creation of Website:

It is paramount for any online business to set up its website to reach a wider audience and make its services known to the masses. Once all the permits and compliances are done with start to work upon your online platform.

13.Web Hosting:

Any online business thrives on the presence that they have online. Any website needs to be hosted so that it is easily accessible and has faster load times. A website which will be getting traffic should definitely get their website hosted.

Where Do We Step In?

Our job here at Business Setup Worldwide is to help you along the process and advise you to the best of our capabilities. Registration, licensing, banking, and every other formality to help you set up your business can be fulfilled by us.