The Kingdom of Saudi Arabia is a country located on the Arabian Peninsula, Western Asia. The country has the largest economy in the Middle East since it is the largest exporter of petroleum globally. Other than oil, Saudi Arabia is not rich in natural resources, and the non-petroleum sectors are not as developed. Islamic law is the governing law of Saudi Arabia. Rich Muslim heritage and its religion play a central part in the country’s culture. The country also protects its nationals over foreign investors when it comes to business. The capital city is Riyadh, the official language is Arabic, and the currency used is Saudi Riyal. Saudi Arabia is a member state of the Gulf Cooperation Council (GCC).
Most foreign investors aim for the petroleum industry and large companies. However, there is always a possibility of starting your own business in other sectors. An Establishment might be a good place to start.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
What is an Establishment in Saudi Arabia?
In Saudi Arabia, a sole proprietorship is referred to as an establishment. It is a business owned and run by only one person. There are no other shareholders, and no minimum capital is required. The liability of the individual owner is not limited, which means that they are responsible for all assets and debts of their establishment on their personal possessions. The establishments are not subject to corporate law; they are subject to commercial registry law.
This form is the most suitable for a small business. It is easy to establish and run. Saudi Arabia’s economy is constantly growing, and the business environment is fast-changing. Sole proprietorships are flexible and easy to adapt since there is only one decision-maker.
Only Saudi or GCC member state nationals can register an establishment in Saudi Arabia.
To operate an establishment, you need to register it with the authorities first.
Establishment registration process
The establishment registration is done with the Ministry of Commerce in Saudi Arabia. On the website, you have the E-services option. This service allows you to enter a commercial register without having to visit any of the Ministry’s branches.
First, create an account and log in to e-services. Next, click on My C.R. and then click on Issue a Commercial Register. You can choose a business name, type, and the number of years the registration will be valid.
The registration fee costs SR 200 per year. A payment bill will be issued and sent to your mobile through SMS. The Chamber of Commerce fees are added according to the type of activity for the commercial register and the grade for each year. After your payment has been accepted and if everything is in order, you will obtain the Commercial Registration (C.R.). You will be able to print it without attending the Ministry by visiting this link.
The whole process can be done physically as well, by visiting the Ministry of Commerce or its branch office.
Once you have your CR, you can start operating your business. However, you have yet to register for tax purposes.