How to Obtain a Commercial License in KSA: Types & Fees

Saudi Arabia's trade industry witnessed 104,000 commercial registrations in the first quarter of 2024, marking a 59 percent year-on-year growth, according to official data.

Source: Arab News

The Kingdom of Saudi Arabia has a favorable economic and strategic location in the Middle East, making it an attractive foreign investment environment. 

Saudi Arabia is among the countries that have diversified economic, commercial, and industrial activities; therefore, foreign investors seek to invest in the Kingdom. 

Given the importance of business in the Kingdom and its constant pursuit to facilitate the participation of foreign enterprises in commercial activity; mainly in the wholesale and retail trade in the Saudi market under the controls and conditions specified by the Royal Commission, whether the commercial license is for a Saudi Shareholder or a 100% foreign commercial license, we shall explain below the requirements for such licenses. 

What Is A Commercial License In Saudi Arabia?

A commercial license in Saudi Arabia is a legal document that grants a business entity the right to conduct commercial activities within the Kingdom. It is essential for any business looking to operate in Saudi Arabia, whether it's a local or foreign company.

What Are The Types Of Commercial Licenses In Saudi Arabia?

A commercial license is a legal approval to practice certain commercial activities in KSA. Companies and individuals are required to obtain a license before practicing their commercial activity, which is issued by the Ministry of Municipalities and Housing. Commercial licenses are applied for through the website (the E-Services Portal), and the service is delivered within a maximum of two working days.

The Royal Commission in Saudi Arabia provides several options for foreign enterprises wishing to practice commercial activity and obtain a commercial license. These licenses are divided into:

• A commercial license with a Saudi Shareholder.
• A 100% foreign commercial license.

The authority responsible for issuing these licenses is the Saudi Ministry of Commerce.

How Do You Obtain A Commercial License From A Saudi Shareholder?

This service is provided to foreign enterprises that are interested in wholesale and retail trade activity in the Kingdom of Saudi Arabia with a Saudi shareholder.

Required Documentation:

• A copy of the commercial registration of the facility certified by the Saudi Embassy
• A copy of the national ID, if one of the partners is a natural person (individual) holding the nationality of one of the GCC countries (in case this person's data is not registered in the ABSHAR system).
• The financial statements for the most recent fiscal year of the applicant company, certified by the Saudi Embassy.

Obtaining Commercial License Rules and Restrictions You Need to Know

• The existence of a Saudi shareholder in the investment license with a share of not less than 25% of the company. The minimum capital requirement is (26,666.67) Saudi Riyals, while and the maximum percentage of Saudi partnership is 75%.
• Premium residency holders are exempted from the above restriction. 
• In case that one of the partners was previously licensed by Ministry of Investment, it must be clarified when filling in the partners' data while submitting the electronic application. 
• The applicant must enter the data of the Saudi national identity/ Premium residence/ residence if one of the partners holds any of them, or the commercial registration data for the participating Saudi companies during the electronic application submission.
• The commercial license applicant is committed to having a Saudi partner, training 15% of the Saudi staff and not opening more than one store in one neighborhood.
• The enterprise is obliged to train 15% of Saudis, and not to open more than one store in a neighborhood. 

What is the License Fee? 

Commercial License co

• License fees are 2,000 Saudi Riyals yearly with a maximum of five years.
• License fees for the first year subscription to obtain services from the Investor Relations Centers of the Ministry of Investment are 10,000 Saudi Riyals; then, the yearly subscription fees in the following years are 60,000 Saudi Riyals.
• Service fees shall be paid within (60) days from the bill issuance date. In case of delay, the service shall be cancelled and a new application has to be submitted.

How to Obtain 100% Foreign Commercial License in KSA?

This Service is provided to 100% foreign enterprises that practice the activity of wholesale and retail trade and e-commerce in the Kingdom of Saudi Arabia.

Required Documentation:

• A copy of the commercial register in at least in (3) regional or international markets. 
• The financial statements for the most recent fiscal year of the applicant company, certified by the Saudi Embassy.

Rules and Restrictions 

• This service is limited to foreign companies that have a presence at least in (3) regional or international markets. 
• The minimum capital required to practice wholesale and retail trade activity for foreign companies with a 100% ownership percentage, is thirty (30) million Saudi Riyals. 
• In case one of the shareholders was previously licensed by Ministry of Investment, it must be clarified when filling in the shareholders' data while submitting the electronic application. 
• The company is obliged to train (30%) of the Saudi employees. 
• The company shall comply to achieve following standards during the first five years: 
  • The company shall comply with the localization rates as determined by the Ministry of Human Resource and Social Development, as it shall develop and implement a plan to upgrade them in senior management positions in the first five years and to ensure their continuation.
  • The company shall train (30%) of Saudi employees annually. 
• The company shall comply to achieve one of the following options: 
  • The company shall invest a minimum amount of (300) million Saudi Riyals (of which 30 million Saudi Riyals are the cash capital of the company) over five years starting from the date of obtaining the investment license. 
• The company shall invest an amount a minimum amount of (200) million Saudi Riyals (of which 30 million Saudi Riyals as the cash capital of the company) over five years starting from the date of obtaining the investment license, in addition to achieving one of the set requirements during the first five years 
• If the foreign investor finds difficulty in achieving any of the set requirements, kindly contact (InvestorCare@misa.gov.sa) for support and assistance 

100% Foreign Commercial License in KSA Fees: 

• License fees are 2,000 Saudi Riyals yearly with a maximum of five years.
• License fees for the first year subscription to obtain services from the Investor Relations Centers of the Ministry of Investment are 10,000 Saudi Riyals; then: 
  • For the Manufacturing Standard: 30% or more of the company's products distributed locally shall be manufactured in KSA.
  • For Research and Development Programs: 5% or more of total sales shall be allocated to the establishment of R&D Programs in the Kingdom 
  • For the Logistics and Distribution: The establishment of a service center to provide such services, in addition to after-sales services 
• The subscription fees for services in the following years shall be (SR 60,000) for each year. 
• Service fees shall be paid within (60) days from the bill issuance date. In case of delay, the service shall be cancelled and a new application has to be submitted.

Is Obtaining A Commercial License In Saudi Arabia Hard For You?

The process can be demanding, but with the right guidance, you can secure your license and unlock exciting business opportunities in this thriving market.

Sadany and Khalifa Law Firm is here to help you every step of the way. Our team of experienced commercial law specialists can advise you on the best license type for your needs, handle all the paperwork, and ensure compliance with regulations.

Don't go it alone! Contact Sadany and Khalifa Law Firm today for a free consultation. Let's discuss your business goals and develop a smooth path to success in Saudi Arabia.

Here's what we can offer:

• Expert guidance: We'll help you choose the right commercial license type based on your business structure and activity.
• Streamlined process: We'll handle all the documentation and application procedures for a stress-free experience.
• Compliance reassurance: Our lawyers will ensure your business adheres to all relevant regulations.

Contact us now!