Thinking About Expanding to Saudi Arabia? Here Is What Nobody Tells You

Saudi Arabia is the biggest opportunity in the region. It is also the most complex market to enter.

Every week, we speak to UAE-based business owners who want to expand into Saudi Arabia. The conversation usually starts the same way: ‘Saudi is booming. Vision 2030 is creating massive opportunities. We want a piece of it.’ They are right. But here is what most people do not tell you: Saudi Arabia is also one of the most complex markets to enter in the region.

The Regulatory Landscape

• MISA Licence: Foreign investors must obtain an investment licence from MISA before establishing a company in Saudi Arabia.
• Commercial Registration (CR): Once the MISA licence is obtained, the company must register with the Ministry of Commerce.
• 100% Foreign Ownership: Saudi Arabia now permits 100% foreign ownership in most sectors, eliminating the previous requirement for a Saudi partner in many cases.
• Saudisation (Nitaqat): Saudi Arabia requires businesses to employ a minimum percentage of Saudi nationals. Non-compliance can result in restrictions on visa issuance and government service access.

The Tax Landscape

• Corporate Income Tax: Foreign-owned companies are subject to corporate income tax at 20% — significantly higher than the UAE’s 9% rate.
• Zakat: Saudi and GCC national shareholders are subject to Zakat at 2.5% of the Zakat base.
• VAT: Saudi Arabia’s VAT rate is 15% — three times the UAE rate. ZATCA has an active audit programme and mandatory e-invoicing (Fatoora) for all VAT-registered businesses.
• Withholding Tax: Saudi Arabia levies withholding tax on payments to non-resident entities, at rates ranging from 5% to 20%.

The Practical Realities

• The pace is different. Saudi Arabia operates at a different pace from the UAE. Government approvals take longer. Relationship-building is more important.
• Local relationships matter enormously. Saudi Arabia is a relationship-driven market. Having the right local partners, advisors, and networks is not just helpful — it is often essential.
• Cultural and regulatory differences are real. What works in Dubai does not always work in Riyadh. Businesses that take the time to understand the market are significantly more successful.

At FMCA, we have helped numerous UAE-based businesses navigate the Saudi market entry process — from initial feasibility assessment through company formation, tax registration, and ongoing compliance. We have presence and relationships in both markets.