GCH was established since the year 2000 to offer a wide range of professional consulting services under one Umbrella. GCH is associated with a highly qualified knowledgeable and experienced group of Consultants having knowledge in the fields of financial, Economic, Investment, legal and Managerial aspects of business.

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KSA:+966 (13)8820570
Bahrain: +973 (17)558755

1- What are the forms of investment in Saudi Arabia?
  • Individual Establishment
  • Branch of a Foreign Company
  • Limited Liability Company
  • Closed Joint-Stock Company
  • Representative Office (Technical Support Office)
  • Temporary Company
2- What are the major aspects of both Limited Liability Company and Branch of Foreign Company and how do they differ in terms of ownership structure, capital, and liability?
One of the major issues that an investor has to take into consideration when establishing a business in Saudi Arabia is the structure of the entity. The entity’s structure must meet investor’s requirements, such as, management style preferences, confidentiality of the processes, controlling factors over operations, etc.

Moreover, each of the structures entails some advantages and disadvantages, which will also be answered in this section. The investor must understand the key features of each entity’s structure in order to determine which is appropriate for him.

Below are the most common structures applicable for setting up a business in Saudi Arabia:

1. Limited Liability Company (LLC)
A LLC is an independent legal entity that may either be a joint venture (between a foreign company and Saudi natural or legal person/s), or a 100% foreign-owned entity. The owners of the LLC are called partners or shareholders. As per Saudi Laws, the minimum shareholder for LLC is two, and the maximum is 50. In case the number of shareholders falls below two, the LLC shall be automatically dissolved.

The most prominent feature of this structure is the limitation of the shareholders to the liabilities, generally, up to the extent of their capital contributions only. However, in case the LLC incurred losses up to 50% of the total registered capital, and if there was no action taken by the shareholders to resolve such losses, nor proceed with the dissolution of the LLC, the shareholders shall then be personally liable.

The LLC regulations are specified in its Articles of Association.

Whether the LLC will be a Joint Venture or 100% foreign-owned entity, the shareholders may appoint either Saudi or foreign manager, whether or not such manager will come from the shareholders themselves, or any third party. The appointed manager shall represent the LLC in front of government departments, customers, courts, suppliers, etc., and shall have the authority over day-to-day management of the company, as described in the authorization issued to him by the shareholders.

Profits of the LLC are distributed in proportion to the shareholders’ capital contribution, taking into consideration of the 10% profit deduction, which will form part of the statutory reserve of the LLC, as provided for in Article (176) of the Companies Regulations.

The shareholders are allowed to transfer their shares either to their co-shareholders or third parties, provided that there is written consent from the remaining shareholders, and the pre-emptive rights of the other shareholders shall be taken into consideration. In case of transfer of shares, the shareholders have the right to recover their capital contribution. The transfer of shares requires the approval of SAGIA in order to amend the investment license; and of Ministry of Commerce for the amendment of the Articles of Association and Commercial Registration of the LLC.

A Saudi-registered LLC has the benefits to repatriate profits, sponsor non-Saudi employees, acquire or lease premises for business operation and employees accommodation, and obtain industrial loans from SIDF and other banks.

2. Branch of Foreign Company
Another option that an investor may consider is by establishing a Branch of a company registered outside Saudi Arabia, which we refer hereto, as Branch of Foreign Company (“Branch”). The Branch is considered as the representative of a foreign company in Saudi Arabia, and it is allowed to perform its activities in the Kingdom, like any registered LLCs, and to engage in business in accordance with the license issued by SAGIA.

Obviously, the Branch is 100% owned by a foreign company (Mother Company) and it is not considered as independent entity. Unlike LLC, the Mother Company shall be responsible for all the liabilities of the Branch in Saudi Arabia.

The Mother Company has control over the management and operations of its Branch, although appointing a manager shall be required from Mother Company, to become the representative of the Branch in front of government departments, customers, courts, suppliers, etc., and the appointed manager shall be responsible for day-to-day activities of the Branch, in accordance to the authorization given to him by the Mother Company.

The activities of the Branch are limited to the activities of the Mother Company, and since it is not an independent entity, it cannot enter into any Joint Venture or partnership, nor establish its own Branch.

The Branch operations and internal regulations are guided by those of the Mother Company, as long as they are not in contradiction with the Saudi Laws, and with consideration of the limitations set forth in the investment license of the Branch.

The Branch also enjoys the benefits similar to that of LLC, such as repatriation of profits, sponsoring non-Saudi employees, acquiring or leasing premises for business operation and employees’ accommodation, and obtaining industrial loans from SIDF and other banks.

3- What is the minimum capital required for a limited liability company or Branch
  • For service LLC or Branch , the minimum capital is SR500,000
  • For industrial LLC or Branch, the minimum capital is SR1,000,000

    Recently, SAGIA is giving more attention to mega investments. Based on this fact, we found difficulties in processing applications for investors with minimum capital, therefore we advise foreign companies to increase the investment amount in KSA and not to stick with the minimum taking into consideration that capital invested by foreign companies is not subject for tax in KSA. Foreign companies pays 20% on the achieved net profit only.

4- How many partners are required for a LLC?
SAGIA requires at least two partners to establish a LLC. The partners may be individual or company, provided that the minimum share of each partner in the total capital is 5%, or less than 5% if the invested capital exceeds the minimum capital requirement.
5- Is it required to have a Saudi partner in the LLC?
Some activities like EPC, trading and engineering offices are required by law to have a Saudi partner.Other activities are permitted by law, to be registered as 100% foreign-owned investment. On the other hand, it is an added value to have a Saudi partner who can provide the technical, financial and marketing services.
6- What is the procedure and uses of Capital fund?
Regardless of the project is industrial, services or any other type, the required paid up capital must be deposited in a Saudi Bank to obtain Capital Deposit Certificate before obtaining the Commercial Registration (CR) certificate. Usually such amount shall be fixed for a couple of days (from deposit stage until obtaining CR). After having the CR, the company is free to use such capital locally or outside Saudi Arabia for the purpose of the company. For example, purchasing equipments, purchasing materials, paying expenses, etc.
7- Is it a must to declare any investments in KSA when submitting for a new Commercial Registration?
Any company willing to invest in Saudi Arabia must declare their participation and such company should have all the required documents valid and must be an active company.
8- How a Holding company can invest in KSA?
If the Holding company wants to invest in Saudi Arabia in any activity, such activity must be mentioned in the Articles of Association of the Holding company.
9- What is the Foreign Corporate Tax in Saudi Arabia.
Foreign Corporate Tax in Saudi Arabia, for the time being, is 20% from the net profit. This percentage applies regardless of the type of company. If there are losses, it can be carried forward to the next year and can be deducted from future profits. Recently, there is a lot of discussion about tax deductions after Saudi Arabia joined the WTO, but there is no confirmation about it until now. Moreover, an additional 5% tax will be imposed on the distributed profits to the foreign partners. We advise you to contact a CPA Auditor since tax is not our specialty.
10- Is there any incentive for a manufacturing project in Saudi Arabia?
Yes, and this is regardless of the ownership. Industrial projects are entitled to get some incentives like special rate for the electricity, land and water. In addition, Saudi Investment Development Fund (SIDF) gives free of charge loans to some projects which can cover up to 50% of the financial requirements for establishing the industrial projects.
11- What are the basic requisites for opening a Representative Office (Technical Support Office) in Saudi Arabia?
In order to establish a Technical Support Office in Saudi Arabia, the company should be in the field of industry and should have existing distributor or agent in Saudi Arabia. It must also meet all other requirements of SAGIA.
12- Can investors obtain residency in Saudi Arabia?
If the investors decide to obtain residency (iqama) in Saudi Arabia, the percentage of ownership in the investment should be at least 25%, or less that 25% if the invested capital exceeds than minimum capital requirement.
13- Can a female invest in Saudi Arabia?
Yes, provided that the female investor can meet all the requirements and qualifications of SAGIA.
14- What is a temporary investment license?
A Temporary Investment License is given to companies with the objective of executing a certain project in Saudi Arabia. According to SAGIA regulations, all temporary licenses will be cancelled automatically after executing and finalizing the contract awarded to the investor. If the investor is still interested to continue providing services and contracting with other clients in Saudi Arabia, then, it is recommended that he converts the license into a permanent investment license.
15- What are the steps for canceling the CR (Liquidation)?
  • Usually the investing company should issue a resolution that they are no longer interested to work in Saudi market and that they are decided to close/liquidate their investment in the Kingdom.
  • The investment company shall prepare/issue a Power of Attorney for their representatives in Saudi Arabia delegating to them the task to liquidate the company and to cancel the CR
  • A final audited report closing the balance sheet should be issued from the appointed CPA of the company.
  • An application, together with the required documents (e.i. license, CR, AOA, GOSI certificate, valid tax certificate, closing balance sheet, etc.), shall be submitted to SAGIA to issue a decision for the cancellation of the license of the company.
  • After the issuance of the Cancellation Certificate from SAGIA, the papers shall be forwarded to the Ministry of Commerce (MOC), where they will ask for the publication on official gazette or newspaper regarding cancellation of the license of the company.
  • MOC will request a certificate from Labor Office and Tax Department that there are no labor/employees under the CR of the company and that the company has no tax liability.
  • After MOC, CR of the company will be cancelled.
16- Can foreign investors engage in trading activities in Saudi Arabia?
Trading activities in Saudi Arabia are not allowed for foreign investors (except for GCC nationals) unless the capital is at least SR27 million and they should have a Saudi partner who will own at least 25% of the capital of the JV.
17- What is the estimated time to complete registration process of the investments in Saudi Arabia?
In general, the time consumed to finish all the formalities of registering foreign LLC, Branch, Establishment and Representative Office is approximately 2-3 months.
18- What is the most popular legal status of investment in Saudi Arabia?
The most popular form of foreign investment is the limited liability company (LLC) because of the following reasons?
  • Limited as to liability
  • No need to issue a Commitment Letter from the Mother Company
  • No need to secure approval from the Saudi Arabia Ministry of Commerce
  • Ease of Formation.
  • It may be wholly owned by foreign investors
  • Offers flexibility in management and business scope
19- What are the new requirements for registering a construction company in Saudi Arabia?
Other than the basic requirements, SAGIA is now requiring all applicants for construction companies to comply with the following requirements:-

  • 1. License applications will be limited to legal persons in the form of LLC or Joint Stock Company.
  • 2. Approval of the fields of classifications issued by the Ministry of Municipal & Rural Affairs as a reference to identify and describe the activities related to the activity of construction, building, management and maintenance, operation and cleaning and it should be consistent with the kingdom international commitments.
  • 3. Provide a detailed action (Business) plan indicates accurately the capability of the project to achieve the objectives of the investment including its contribution in the increase of the Kingdom revenue, and (Saudization Plan) for the jobs that will be provided by the project to the Saudi citizens, how the project contribute in promotion of competition and services and the diversity of option for consumers , the strategic investment dimensions of the project on the investment in the Kingdom, the advantage of the city that to be the center of the project and its region of this project.
  • 4. Proof the financial capacity for investment commensurate with the project capital and share of each partner and commensurate with action plan provided for the project. And that the license applicant company has implemented an earlier project in its country or another country, in a financial value beyond the financial limits of the 3rd class of classification approved by the Ministry of Municipal and Rural Affairs or equivalent
  • 5. Submit a balance sheet of license applicant company outside the kingdom not less than 3 years and not more than 10 years describes the integrity of the financial position provided that to it have profit in all years and to be prepared by a CPA and attested from the concerned authorities in charge of commercial activities and taxes in home country of the company and attested by the embassy of KSA.
  • 6. Not employ than 25% of non-Saudi manpower, if necessary, among this percentage there will be managers, executives and specialists who have the experience not less than 3 years in the same activity to work with the company after being licensed by SAGIA.
  • 7. No combination is allowed in the license application between construction & building, maintenance & operation in one license, excluding companies with more than 300 employees at their home country.
  • 8. The license applicant company provides an unconditional and irrevocable bank guarantee in the name of SAGIA renewed annually against granting the license at rate of 2% of the financial limits for 3rd Class of the classifications provided by Ministry of Municipal & Rural Affairs or equivalent for the targeted the activity. Such guarantee remains valid and enforceable until the write-off the commercial registration.
  • 9. Obtaining an insurance against the company errors in implementation of the project after being granted the license or when renewed.
  • 10. Commitment of the licensed company or renewed license to submit an annual report on all projects that awarded to or executed by the company and the value of each project.
  • 11. Commitment of the licensed company or renewed license to provide all data and information and the financial statements to any auditor determined by SAGIA to audit its financials.
20- What are the new requirements for registering a Light Industries Manufacturing Company in Saudi Arabia?
Other than the basic requirements, SAGIA is now requiring all applicants for construction companies to comply with the following requirements: -
  • 1. License applications will be limited to legal persons in the form of LLC or Joint Stock Company.
  • 2. The technical specifications of or method of product must comply with Gulf, Saudi or international specifications.
  • 3. The final product must be in conformity with Saudi technical regulations, or the related Saudi standard specifications
  • 4. The project premises must within one the industrial or economic cities.
  • 5. Design of the project site should be made by a certified, licensed engineering firm.
  • 6. That the purpose of the production of the final product is to achieve self-sufficiency for the domestic market and export development.
  • 7. Not employ than 25% of non-Saudi manpower, if necessary, among this percentage there will be managers, executives and specialists who have the experience not less than 3 years in the same activity to work with the company after being licensed by SAGIA.
  • 8. Provide a detailed action plan indicates accurately the capability of the project to achieve the objectives of the investment including its contribution in the increase of the Kingdom revenue, and the jobs that will be provided by the project to the citizens, how the project contribute in promotion of competition and services and the diversity of option for consumers , the strategic investment dimensions of the project on the investment in the Kingdom, the advantage of the city that to be the center of the project and its region of this project.
  • 9. Proof the financial capacity for investment commensurate with the project capital and share of each partner and commensurate with action plan provided for the project
  • 10. Submit a balance sheet of license applicant company outside the kingdom not less than 3 years and not more than 10 years describes the integrity of the financial position provided that have profit in all years and to be prepared by a CPA and attested from the concerned authorities in charge of commercial activities and taxes in home country of the company and attested by the embassy of KSA.
  • 11. Existence of technical system to manage and control production , recycling , waste disposal as well operation according to clear production lines, power consumption, stores, safety a security in the factory.
  • 12. Existence of approved safety plan in the factory.
  • 13. Provide an annual report of factory production, raw materials consumption, import & export and production volume commensurate with factory size and number of staff.
  • 14. Provide all data and information and the financial statements to any auditor determined by SAGIA to audit its financials.
21- Who can be appointed as General Manager of the Joint Venture (JV)?
Any person, regardless of his nationality and qualification, appointed by the shareholders, can be the General Manager of the LLC or the JV. His name will appear in the Commercial Registration and he will be required to obtain residency in Saudi Arabia.
22- Is the appointed General Manager required to stay in Saudi Arabia?
Generally, the appointed General Manager is the person who is required to represent the company in front of government authorities in Saudi Arabia. Therefore, he is required to have his residency in Saudi Arabia but there is no restriction as to his movement going in/out Saudi Arabia except for the General Manager of a Professional Engineering Company, where he is required to stay in Saudi Arabia for at least 9 months in a year.
23- Can a 100% GCC company in Saudi Arabia appoint a manager who is not a GCC national?
No, a 100% GCC company should only appoint a GCC national as general manager of the company. But this manager may delegate his authorities to other persons whether GCC national or not, provided that such persons are under the same sponsorship.
24- What are the required qualifications to become the General Manager of a JV with EPC activities?
According to the Ministry of Commerce, the Manager should be a member of a professional association in his country. Otherwise, he may use his membership in KSA, if any.
25- Who are the approving authorities for LLC engaging in EPC activities?
To obtain license for LLC with EPC activities, it needs approval from Saudi Council for Engineers (SCE), Ministry of Commerce and Industry (MOCI) and Saudi Arabian General Investment Authority (SAGIA).
26- What are the requirements for Engineering Company?
For the Saudi partner:
  • he should have a professional license allowing him to practice the profession
  • his share should be not less than 25% of the capital

For the foreign company partner:
  • a certificate from the competent authorities in the country of origin stating that the company has good reputation and working in the professional field of activity for not less than 10 years
  • Certificate of Incorporation attested by competent authorities
  • An undertaking that it shall provide expertise, technology and will train Saudi staff
  • Copy of AOA
  • a resolution appointing its representative in Saudi Arabia
27- What are the requirements for Engineering Company?

Required Documents from Foreign Partner
  • Copy of the Articles of Association, attested from the Embassy of Saudi Arabia in the country where the company is registered.
  • Copy of the CR (Commercial Registration Certificate), attested from the Saudi Embassy.
  • Copy of the audited balance sheets of the last three years (2008, 2009 & 2010), audited by legal auditor in that country and attested from the Saudi Embassy.
  • A certificate from the competent authorities in the country of origin stating that the company has good reputation and working in the professional field of activity for not less than 10 years (attested by Saudi Embassy).
  • An undertaking from the Foreign Partner that it shall provide expertise, technology and will train Saudi Staff.
  • Power(s) of Attorney, Board Resolution(S) and Manager Authorization(s), to be notarized and attested from Saudi Embassy. (We shall provide you with the format upon appointing GCH as your formal representative)
  • Company profile.
  • Contacting details; phone, fax, e-mail, P.O. Box …. etc.
  • Accomplishment letters from companies or clients outside Saudi Arabia in field of Engineering, attested by Saudi Embassy.
  • Copy of the Passport of the Director-Representative of the Company.
  • 8 personal photos, size: 3x4, white background for the Director-Representative of the Company.
  • A letter or certificate stating that the person whose signature appearing in the authorization and resolution is the authorized representative and signatory of the company, to be stamped from Saudi Embassy.
Required Documents from Saudi Partner
  • Copy of the Professional License.
  • POA to be done in front of the Saudi Notary Public (We will provide the format upon appointing GCH as your representative)
  • Profile of the Engineering Firm
  • Copy of ID Card
  • (8) pieces photos, size 3x4, white background

Required Documents from the appointed Manager of the JV
  • Copy of the Passport of the JV manager in KSA.
  • 8 personal photos, size: 3x4, white background for the manager of the new JV in KSA.
  • Copy of the university degree in the field of the company’s business (attested by Saudi Embassy).
  • Copy of the membership professional association of the manager in the same field of the License. (Attested by Saudi Embassy).
  • 10 years Experience in the same field (attested letter).
  • An undertaking to stay in Saudi Arabia for not less than 9 months (attested by Saudi Embassy).
28- What are the types of entry visas in the Kingdom?
There are four types of entry visas to the Kingdom:
  • Investor visas
  • Business visit visas
  • Employment visas
  • Family visit visas.
29- How much time is needed to complete the formalities for obtaining visa?
  • Investor visas - one to two weeks
  • Business visit visas - one week
  • Employment visas – one month
  • Family visit visas – 1 week
30- How many work visas can a company obtain in Saudi Arabia?
Initially, the number of visas issued to company is 1+2, meaning, 1 visa is issued for the appointed manager during the registration process and additional 2 visas shall be given for other employees after obtaining the Commercial Registration. Thereafter, the company may request for additional visas and the approval of such request will be based on the necessity for manpower to carry out its activities or execute its contracts.
31- Does SAGIA require the investor to open a bank account to transfer the minimum capital requirement into Saudi Arabia? If yes, can the investor withdraw the deposited capital?
Yes, the investor is required to open a bank account in any Saudi bank in order to deposit the required capital. After obtaining the Commercial Registration, he has the freedom to withdraw the capital and use it in the company operations.
32- Is it required to translate all documents into Arabic before sending them to Saudi Embassy for attestation?
All documents should be attested in Saudi Embassy in the investor's country of residence. In Saudi Arabia, the documents can be translated in to Arabic. Unless the Saudi Embassy has its own condition of translating the documents, English language is acceptable for SAGIA.
33- Can an Individual Establishment be a partner in the LLC?
Yes, an Individual Establishment can be a partner in LLC taking into consideration that the investment will be in the name of the owner of the Establishment.
34- Can a Foreign Individual Establishment (Sole Proprietorship) be a partner in the LLC?
No. SAGIA recently limited the Investment in Saudi Arabia in major sectors (Manufacturing, contracting, Trading and Restaurants) to Limited Liability Companies and Joint Stock companies only. Only an already registered Individual Establishment in KSA can be a partner in LLC taking into consideration that the investment will be in the name of the owner of the Establishment.
35- What are the rules for applying trade names of the company?
Following are the rules for reserving the trade name of the company from the Ministry of Commerce:
  • Words which have equivalent meaning in Arabic may be used.
  • Foreign companies are allowed to use their non-Arabic company names
  • Using non-Arabic name of a person is allowed only if it is the name of the shareholders in the L.L.C.
  • The trade name shall have a distinctive character and shall not be used/reserved before.
  • Use of abbreviations is not allowed for trade names
36- What are the ways of acquiring information about public bidding in advance?
Usually any company aiming to work in Saudi Arabia can gather information about public biddings by any of the following ways:
  • The targeted client website, like Aramco, Saudi Electricity Company, SWCC, SABIC, Ma'adn, various Governmental websites and so on.
  • Direct notification and contact from the client to the qualified bidders
  • Public Newspaper. Some companies or public sector entities announce their biddings through the public newspaper and through the official gazette in Saudi Arabia (Um Al Qura).
  • Through the Chamber of Commerce in each city.
  • Specialized website for new bidding.
37- Are there any government guidelines for obtaining information about marketing guide prices, e.g. renting prices of project equipment and prices of project materials, which is issued by Saudi government?
In the Kingdom of Saudi Arabia, there are NO governmental guidelines or instructions regulating the renting sector. Any company interested in renting any equipments or purchasing any material shall contact the various companies in the Kingdom and get quotations for that.
38- Can a foreign investor purchase local companies in Saudi Arabia? What are the qualifications and conditions needed?
Yes, Merger and Acquisition (M&A) is allowed in KSA, and foreign company may acquire shares of a local company based on the followings:-
  • The foreign company shall get approval from SAGIA.
  • The line of services of the purchased company shall be approved within the Saudi Foreign Investment Regulations.
39- Can foreign companies purchase land for accommodation in Saudi Arabia ?
Any foreign company can purchase/rent a land and build a compound or houses for its employees. The foreign company is NOT ALLOWED to buy land and build the accommodation and then rent it to others unless it is licensed for such activity. The company can purchase the land according to the Saudi Government Laws and own it % 100 subject for approvals from SAGIA and municipality. The price and payment methods vary based on the location and owner of the land.
40- If foreign companies want camp construction, will the construction planning need to be approved by government? If it is needed, what are the relevant procedures?
If a company wants to setup a camp construction, then an approval shall be obtained from the Municipality before lunching construction works even if this camp will be used for the internal company purposes.
41- How can companies employ or dismiss local labours in Saudi Arabia? Are there any relevant laws or regulations? Are there any risks in employing or dismissing local labours? And how to avoid and solve these risks?
Lot of labour issues were tackled and organized by the Saudi Labour Regulation dated 28/10/2005 (G). Labour regulation defined wage, as (employers'/employees') rights and obligations. Moreover, labour regulation left the door open for other contractual arrangements between parties for them to decide through the Employment Contract on the condition that it shall not contradict the regulation itself.
42- Can investors in KSA participate in a JV with another company?
Yes. Usually, up to 3-4 ownership the investor may participate. A newly registered company may participate in a JV only after the issuance of the first financial statements.
43- What are the Iqama System Violations & Penalties?
No. Violation Penalties

1

Non-reporting for Iqama renewal prior to 3 days of its expiry without applicable reason

  • If the applicant's employer is an individual or private company or establishment, he shall be required to pay double the Iqama fees.
  • If the applicant is working for a governmental institute, the institute is responsible for submitting new Iqama and Iqama renewal requests of their personnel within 2 months of recruiting them and before its expiry. In case of delay, the institution shall be required to investigate with the employee responsible of this delay to decide the disciplinary action for such violation.

2

Resident who fails to prove his holding of an Iqama and all information he was asked to present during his residency in the Kingdom

If he failed to provide an applicable reason for the concerned authority, he shall be fined as follows:
  • 1000 S.R. first instance.
  • 2000 S.R. second instance.
  • 3000 S.R. third instance.

3

Non-reporting to cancel or renew exit/re-entry visa or final exit visa prior to its expiry

He shall be fined as follows:
  • 1000 S.R. first instance.
  • 2000 S.R. second instance.
  • 3000 S.R. third instance.
  • He shall be provided with a new visa if required, as per the statutory procedures.

4

Non-reporting loss of passport or Iqama within 24 hours as a maximum

He shall be fined as follows:
  • 1000 S.R. first instance.
  • 2000 S.R. second instance.
  • 3000 S.R. third instance.

5

Practice of work by the dependants such as wives and children

He shall be fined as follows:
  • 1000 S.R. first instance.
  • 2000 S.R. second instance.
  • 3000 S.R. third instance and the issue will be referred to the Minister of Interior for his direction towards termination of the violator's Iqama and deport him.

6

Overstaying in the Kingdom upon visa expiry

  • The violator shall be subjected to statutory penalties as custody, fining and deporting.
  • Finalising his deporting procedures after collecting the statutory fines, issue an exit visa for him and expedite his travel.
  • If the violator came to visit a resident, the matter shall be referred to the Minister of Interior to issue directives towards the resident who harboured him to terminate his Iqama and deport him.

7

Employing an expatriate with a visitor's visa

  • If the visa was valid he shall be deported.
  • If the visa was expired he shall be deported after implementing the statutory procedures.
  • The employer shall be fined according to the statutory measures, if the employer is an expatriate resident; he will be reported to the authorities after implementing the statuary penalties towards him, to consider his deportation.

8

Obtaining or helping an individual to obtain a forge Iqama or visa by himself. Taking employment or helping any individual to take an employment based on forgery or cheating.

  • If the violator is an expatriate, he shall be fined 10,000 S.R. or imprisoned for 3 months or both, along with the termination of his Iqama and deportation from the Kingdom.
  • If the violator is a Saudi Citizen, he shall be fined 10,000 S.R. the first time. 15,000 S.R. in the second time along with one month imprisonment. 15,000 S.R. in the third time along with 3 months imprisonment. Type of violation shall be considered while applying the penalty.
  • These penalties are applicable to the principal perpetrator, partner and contributor.
  •  Paid money shall be confiscated in all cases.
  • Fines are multiplied according to the number of individuals involved and violations.

9

Submitting forgery documents or providing false statements to Saudi authorities in the Kingdom or abroad to obtain for himself or for another individual an Iqama or any kind of visas.

See penalties in paragraph 8.

10

Forgery, easement or changing the content of foreign travel documents or Iqamas, and circulating them.

See penalties in paragraph 8.

11

Trading entry visas

See penalties in paragraph 8.

12

Delaying application and applicants, by service offices, finalising applications illegally and dealing with aliens directly (not through the employer), employing expatriates in the office, accepting applications not signed by the employer or authorised signatories and incomplete signatures and attests or exceeding their authorization in expedition specially Saudi passport applications and Iqama applications for those who came to the Kingdom with a non-working visa.

the following measures shall be taken against any violating service office (despite the prejudice for any penalties provided in statutory as in Forgery, bribery, passport and Iqama regulations):
  • In the first instance, an official warning shall be sent to the office by the director of passports office to which the service office pursuer reports, if the violation doesn't necessitate further action.
  • If the violation was repeated or was a gross one, the matter shall be referred to the Ministry of Commerce (being the authority in charge of issuing licenses to service offices) proposing a suitable penalty of suspension varying from three months, six months or a year or termination of the office's license according to repetition of violation and its size.

13

Return of the deported alien to the Kingdom after his expulsion.

  • In the first instance, the fine is 1000 S.R. and re-deportation.
  • For the second instance, the fine is 2000 S.R., 5 months imprisonment and re-deportation.
  • The fine shall be collected from the deportee immediately upon showing his readiness to pay it, to avoid the possibility of delaying during the finalisation of his procedures.

14

Sheltering the overstayer after performing his Hajj or Umrah, harbouring him or assisting him to stay illegally in the country

  • If the violator is an expatriate resident, his fines are 10,000 S.R., or one month imprisonment, or both along with the termination of his Iqama and deporting him.
  • If the violator is a citizen, his fines in the first instance are 10,000 S.R. and minimum two weeks imprisonment. For the second instance, his fines are 20,000 S.R. and 1 month imprisonment. Third instance fines are 30,000 S.R. and three months imprisonment.
  • Fines are multiplied according to the number of individuals involved.
  • If the citizen wasn't able to pay his fines, he shall be imprisoned for an interval between 1 to 6 months.
  • Publish the violator's penalty in the local press with the judgment thereon according to the censure instructions.
  • In case of renting a residence to the overstayer, the renter shall be considered a violator. He shall submit a pledge which shall be kept for future reference. If violation repeated, the housing unit shall be closed for six months, and for one year in the second violation and in the third instance the closure will be for two years.
  • In the first instance, Saudi violator's age and health condition shall be considered for imprisonment duration, evidenced by attested documents.

15

Hajj, Umrah guest or the Prophet's Mosque visitor, who is self employed, and works for his own account or who didn't leave the country after his visa expiry.

  • Fine is 10,000 S.R. or one month imprisonment or both.
  • His documents shall be copied and sent to the Ministry of Foreign Affairs in order to notify the Saudi Embassy in his country to suspend granting him a visa for Umrah or visit before a year minimally of his deportation.
  • He shall be deported at his own expense.

16

Hajj, Umrah guest or the Prophet's Mosque visitor, who travels outside Makkah, Jeddah or Madinah during validity of the visa granted to him or after its expiry.

  • Fine is 10,000 S.R. or one month imprisonment or both .
  • He shall be deported at his own expense.
  • Investigate the role of the establishment responsible for his entry in the occurrence of the violation before imposing the penalty.

17

Transporting a guest for Hajj, Umrah or the Prophet's Mosque visitor outside the established routes specified for him by the establishment responsible for his arrival and departure during his visa validity

  • If the carrier is an expatriate resident, the fine is 10,000 S.R. or 1 to 3 months imprisonment or both in addition to deportation.
  • If the carrier is a citizen, the first instance fine is 10,000 S.R. or 1 to 3 months imprisonment or both. Second instance fine is 20,000 S.R. or 3 to 6 months imprisonment. Third instance fine is 30,000 S.R. or six months imprisonment.
  • Fines are multiplied according to the number of individuals involved.
  • Investigate the role of the establishment responsible for his entry in the occurrence of the violation to be punished if the violation was established.

18

Transportation of an Umrah or Hajj guest, or the Prophet's Mosque visitor outside the established routes specified for him by the establishment responsible for his arrival and departure after the expiry of the validity of the visa.

  • See penalties in paragraph 17.
  • Publish the violator's penalty in the local press with the judgment thereon according to the censure instructions.

19

Overstayer employment who arrived the Kingdom by non-work visa

  • If the violator is an expatriate resident, the fine is 10,000 S.R. or one month imprisonment or both in addition to deportation.
  • If the violator is a citizen, the first instance fine is 10,000 S.R.. Second instance fine is 20,000 S.R. or one month imprisonment or both. Third instance fine is 30,000 S.R. or three months imprisonment.
  • Fines are multiplied according to the number of individuals involved.
  • Theoverstayer shall be deported on his employer's expenses.
  • In the first instance, the violator shall be deprived from the right to recruit expatriates for one year. Two years for the second instance and three years for the third.
  • If the citizen wasn't able to pay his fines, he shall be imprisoned for an interval between 1 to 3 months.
  • Publish the violator's penalty in local press with the judgment thereon according to the censure instructions.
  • Investigate the role of the establishment responsible for the overstayer entry into the country in employing him illegally prior to imposing the penalty.

20

Non-reporting (by the employer) regarding a runaway employee in accordance with instructions regulating this matter.

  • In the first instance, the employer fine is 5,000 S.R.. Second instance, fine is 10,000 S.R. and for third, fine is 15,000 S.R. in addition to one month imprisonment.
  • Fines are multiplied according to the number of non-reported runaway employees.
  • The runaway employee shall be deported at his employer's expense. If he was working for his own, he shall be deported at his own expense.
  • In the first instance, the violator shall be deprived from the right to recruit expatriates for one year. Two years for the second instance and three years for the third.
  • Sending a copy of the management notification to the patrol command to investigate the establishment's status.

21

Resident working for another employer or for his own account.

  • Termination of his Iqama and he shall be deported.

22

Employing an expatriate who was recruited to work for another employer, by an expatriate resident.

  • If the employer was an expatriate resident, the fine is 5,000 S.R. or one month imprisonment or both in addition to deportation.
  • If the employer was a citizen, the first instance fine is 5,000 S.R.. Second instance fine is 10,000 S.R. or one month imprisonment or both. Third instance fine is 20,000 S.R. or three months imprisonment or both.
  • The employer allowing his employee to work for a third party without reporting their runaway in accordance with the respective instructions, shall be penalized with the penalties referred to in paragraphs (a-b-c-d) of violation No. (20), in addition of sending a copy of the management notification to the patrol command to investigate the establishment's status.
  • Fines are multiplied according to the number of individuals involved.
  • The violator expatriate shall be deported at his employer's expense. If he was working for his own, he shall be deported at his own expense.
  • In the first instance, the violator shall be deprived from the right to recruit expatriates for one year. Two years for the second instance and three years for the third.

23

Employer leaving his employees working for their own account or in return for amounts, paid by them, to him.

  • The employer shall be fined 5,000 S.R. and one month imprisonment for the first instance. Second instance fine is 20,000 S.R. and two months imprisonment. Third instance fine is 50,000 S.R. and three months imprisonment.
  • Fines are multiplied according to the number of individuals involved.
  • Expatriate violator shall be deported at his own expenses.
  • In the first instance, the violator shall be deprived from the right to recruit expatriates for one year. Two years for the second instance and three years for the third.
  • Sending a copy of the management notification to the patrol command to investigate the establishment's status.

24

Employing an infiltrator, accommodating or sheltering him.

  • If the employer was an expatriate resident, the fine is 10,000 S.R. and one month imprisonment in addition to deportation.
  • If the employer was a citizen, the first instance fine is 10,000 S.R. and two weeks imprisonment. Second instance fine is 20,000 S.R. and one month imprisonment. Third instance fine is 50,000 S.R. and three months imprisonment.
  • Fines are multiplied according to the number of individuals involved.
  • The infiltrator expatriate shall be deported at the expense of the employer, accommodator or whoever sheltered him.
  • In the first instance, the violator shall be deprived from the right to recruit expatriates for one year. Two years for the second instance and three years for the third in addition of reporting to the Ministry of Commerce or municipality in order to terminate his register or license.
  • Publish the violator's penalty in local press with the judgment thereon according to the censure instructions.
  • If the violation was committed by an establishment; a copy of the management notification shall be sent to the patrol command to investigate the establishment's status.

25

Transporting expatriates who doesn't have legal Iqama (resident permit), expatriates with an expired visa or without IDs within Kingdom regions, including their transport to the Holy shrine of Hajj and Umrah, by means of transport.

  • For the first instance the carrier fine is 10,000 S.R. and one month imprisonment. Second instance fine is 20,000 S.R. and three months imprisonment. Third instance fine is 30,000 S.R. and six months imprisonment.
  • Fines are multiplied according to the number of individuals involved.
  • Means of land transport shall be confiscated in case of repeating violation, whether such means were owned by the carrier, the accessory or the colluding party.
  • No confiscation may by effected unless by a judicial judgment.
  • Publish the violator's penalty in local press with the judgment thereon according to the censure instructions.
  • If the carrier is an expatriate resident, his Iqama shall be terminated and he shall be deported to his country after the application of the penalty taken against him.

26

Non-submission (by captains of sail vessel, aircraft pilots and drivers of cars and other means of transport) of the passengers manifest of no passports or equivalent documents and if they recognized that such passengers held no such documents or if they didn't prevent the above passengers from landing in the Kingdom or from disembarking on its territorial waters or if they allow such passengers to disembark , even though, they were in possession of travel document in ports, airports and points of entry other than the official ones as set out in article three of the Residence Regulations with the exception of the compulsory reasons.

  • For the first instance the violator fine is 5,000 S.R.. Second instance fine is 5,000 S.R. or one month imprisonment or both. Third instance fine is 5,000 S.R. and five months imprisonment.

27

Colluding and participating in expatriates' entry into the Kingdom's land or territorial waters or assisting them to departure it with the objective of smuggling them out.

  • For the first instance the violator fine is 5,000 S.R. or five months imprisonment or both.
  • Second instance fine is 5,000 S.R. and one year imprisonment in addition of notifying the Board of Grievances in order to confiscate the means of land transport used in smuggling if they were owned by the smuggler, participator or colluder.
  • Third instance fine is 5,000 S.R. and two years imprisonment in addition of notifying the Board of Grievances in order to confiscate the means of land transport used in smuggling in accordance with the above.

28

Expatriate working for an employer other than the one recruited him and whose name is noted down in his work permit, prior to his release by the latter and the approval of the concerned authority on the services transfer.

  • The employee shall be deported from the country at his employer expenses and deprived from the right to return to the Kingdom before the lapse of two years from his deportation date.
  • Provide a copy of the worker's travel documents to the Ministry of Foreign Affairs in order to prevent him from coming back during the above mentioned ban period.

29

Submission of false notification regarding a runaway expatriates from their sponsors.

  • Violator's fine is 5,000 S.R. in addition of submitting a written notification to the authority which issued his license in order to study the establishment's status.

30

Harbouring a runaway expatriate from the employer who recruited him.

  • The runaway expatriate fine is 2,000 S.R. or two weeks imprisonment with the termination of his Iqama.
  • The citizen violator fine is 2,000 S.R. or two weeks imprisonment for the first instance. Second instance fine is 3,000 S.R. or six weeks imprisonment.
  • The runaway expatriate procedures shall be finalised and he shall be deported at the expense of the party harboured him.

31

Runaway resident who was captured by the security authorities or by his employer.

  • The runaway resident shall be arrested until the finalisation of his deportation procedures.
  • The runaway resident shall be deported at the expense of the party that harboured or employed him. If he was captured working for his own account, he shall be deported at his own expense. Employer shall not be obliged to deport him if the period of the notice exceeded three months. He shall then be deported at the expense of the state by written permission from the General Director of Passports.

32

Non-reporting to the Passports Department of the disengagement of any expatriate labourer or his absence from work for two days without stating any reasons.

  • In the first instance, the fine is 1,000 S.R.
  • For the second instance, the fine is 2,000 S.R.
  • For the third instance, the fine is 3,000 S.R.
  • If the labour was captured working for a third party or for his own account and it was alleged that he runaway, the employer status shall be reviewed to find out his other labours situation and their locations.

33

Employment of an expatriate who has no work license by any company, commercial house, contractor or employer.

  • The employer fine is 1,000 S.R.
  • Fines are multiplied according to the number of individuals involved.

34

Transporting individuals who aren't in possession of pilgrimage licenses to Makkah during the period specified by the respective authority

  • If the carrier was an establishment, it shall be fined 2,000 S.R. at the first instance, 5,000 S.R. in the second and 10,000 S.R. at the third. If the carrier was a citizen or resident working for his own account, they shall receive the same penalty.
  • Fines are multiplied according to the number of individuals involved.
44- What are those acts considered violations to provisions of the foreign investment regulations & penalties ?
SAGIA Board of Director Issued on 14/11/1433 (H) corresponding to 30/09/2012 (G) a new list of acts considers Violations to SAGIA Regulation, those Violations read as follows :
  • Without prejudice to any applicable severe penalty, any investor violates the rules of regulations will be subject to on e of the penalties stated in (Article 10) of the regulations, these violations are :
    • Difference between the trade name in CR and the name in SAGIA license
    • Disposition of raw materials or machinery or imported capital equipment by sale or lease.
    • Export or import any materials not related to entity’s activity-
    • Waive or lease of SAGIA license without obtaining the SAGIA approval.

    To read the complete list of violations, please

    click here

45- What is nitaqat ?
Nitaqat is a a new Saudization program, introduced by the Saudi Ministry of Labour. Under the program, private firms are classified into Premium, Green, Yellow and Red categories based on their percentage of Saudization. The program sets penalties and incentives for companies based on which category they fall under. Companies with high Saudization rates will fall under the Premium or Green categories, while those who fail to achieve the required rates will be included in the Yellow and Red categories. Nitaqat ensures that Saudization rates are based on the actual performance of private businesses, and takes into consideration the sector as well as the size of work force for each company.

To read the complete list of NITAQAT (ZONES) SYSTEM, please

click here

46- How many employees does my company have to have to fall under the Nitaqat program?
Companies with less than 10 employees will not fall under the Nitaqat program.
47- Which category does my company fall under?
The criteria used for classification depends on your company's sector and size. In the Nitaqat program, the labour market is segmented into 41 commercial activities, and companies are categorizes into five sizes based on the number of people employed. Please visit the website of the

Saudi Ministry of Labour

to verify your company's category status.
48- What happens if my company falls under Red or Yellow categories?
Companies that fall under the Red category will not be allowed to renew work visas for their foreign employees. They will be barred from opening new branches or facilities. Companies that fall under the Yellow category can renew work visas for each foreign employee on the condition that the employee has not spent more than six years in the kingdom. Yet, they cannot transfer visas of non-Saudi workers to fall under their own sponsorship.
49- If your company falls under the Yellow category, you will face the following penalties:
  • Will only be allowed to get one visa upon the departure of two foreign employees.
  • Will not be allowed to get new visas.
  • Will not be allowed to transfer visas.
  • Will not have control over employees as the employees would be able to to move to companies under Green or Premium categories.
50- If your company falls under the Red category, you will face the following penalties:
  • Will not be allowed to get new visas.
  • Will not be allowed to transfer visas.
  • Will not have control over employees as the employees would be able to to move to companies under Green or Premium categories.
  • Will be deprived from basic ministry services such as renewal of employees' working permits, change of profession, transfer of visas, issuance of new visas and opening files for new business branches.
51- What happens if my company falls under Premium or Green categories?
Companies that fall under the Premium or Green categories will be able to benefit from an easier visa-approval process for their employees. They will also be able to recruit workers from the other categories without having to obtain consent from the other employer.
52- If your company falls under the Premium category, you will be entitled to:
  • Recruit foreign workers without needing to apply for a visa once every two months.
  • Transfer the visas of potential employees from other companies, without having them fulfil the condition of completing two years with the first employee.
  • Recruit employees from companies within the Red or Yellow categories and transfer their visas without permission of their employer.
  • Get a one-year respite if your municipal and professional licenses or commercial registrations are expired.
53- If your company falls under the Green category, you will be able to:
  • Apply for new visas once every two months.
  • Change the professions of your foreign workers, with the exception of positons restricted to Saudis.
  • Get a six-month grace period after the expiry of your zakat and revenue certificates.
  • Renew work permits of current foreign employees given that their residency visas are valid for at least three months.
  • Recruit employees from companies within the Red or Yellow categories and transfer their visas without permission of their employer.
54- How does the Ministry of Labour ensure that the Nitaqat program is being applied across all companies?
The ministry has pledged to take harsh action against general service offices allegedly involved in helping some companies dodge Saudization targets. Aside from closely monitoring the market, the ministry has recently appointed as many as 1,000 inspectors to ensure effective implementation of the Nitaqat program.
55- What are the activities included in the "negative list" as per SAGIA regulations?
SAGIA's "negative list" sets out the activities which are prohibited to foreign investors. Below herewith are the activities included in the "negative list" as per SAGIA regulations:
  • Industrial Sector
    • Oil exploration, drilling and production, except for certain services related to the mining sector
    • Manufacturing of military equipment, devices and uniforms
    • Manufacturing of civilian explosives
  • Service Sector
    • Catering to military personnel
    • Security and detective services
    • Realestate investment in Mecca and Medina
    • Tourist orientation and guidance services related to Hajj and Umrah
    • Recruitment and employment services, including local recruitment offices
    • Real estate brokerage
    • Printing and publishing, other than the following activities:
      • pre-printing services (as specified)
      • printing presses (as specified)
      • drawing and calligraphy (as specified)
      • photography (as specified)
      • radio and television broadcasting studios (as specified)
      • foreign media offices and correspondents (as specified)
      • promotion and advertising (as specified)
      • public relations (as specified)
      • publication (as specified)
      • press services (as specified)
      • production, selling and renting of computer software (as specified)
      • media consultancies and studies (as specified)
      • typing and copying internationally (as specified)
      • motion picture and video tape distribution services (as specified)
    • commission agents
    • audiovisual and media services
    • land transportation services, excluding inter-city passenger transport by trains
    • services provided by midwives, nurses, physical therapy services and quasi-doctoral services
    • fisheries


Please note that SAGIA is periodically reviewing the negative list and it may be changed as per SAGIA discretion.

our answers for the FAQ may subject for changes since regulations in KSA are subject for changes from time to time. therefore, you are most welcomed to contact us via e-mail for the last updated regulations.

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