- What Is SAGIA?
The Saudi Arabian General Investment Authority (SAGIA) is the foreign investment license provider for the Kingdom. It was created by the Saudi Government on 10 April 2000
- SAGIA Company Formation Benefits
- 100% foreign ownership of businesses
- There are no restraints on repatriation of capital
- Sponsorship of employees by foreign companies/investors
- What Are the Conditions to Obtain The Investment License?
- License applicant must have an existing entity outside the Kingdom
- Have at least three years’ experience in the same activity required.
- Individuals possessing patents, scientific content and intellectual rights documented by internationally recognized entities, are eligible to obtain the investment license
- Tax System Overview
The tax system in Saudi Arabia is relatively simple, income tax is due on the non-Saudi shares in a resident corporation while Zakat applies on the Saudi shares.
The corporate tax rate is 20% while Zakat rate is 2.5%. The disposal of shares in a resident company is typically subject to a 20% capital gains tax. However, capital gains deriving from the disposal of securities traded on foreign stock markets are tax exempt if they are also traded on the Saudi stock market. Dividends are taxed as income unless the payer company has minimum 10% Saudi resident ownership for at least one year.
- Minimum Capital Requirements
It is worth noting that the Foreign Investment Law permits foreign investors to operate in all economic sectors except for the activities in the negative list (discussed later).
The minimum capital required by foreign investors investing in the industrial sector is SAR 1,000,000 for all entity types, except for the technical and scientific office where no minimum capital is required. For the services sector, the minimum capital requirement is SAR 500,000.
In the case of limited liability companies which operate in trading sector, the minimum capital is SAR 20,000,000 and requires a KSA local partner(s) to hold at least 25% of the company’s shares (i.e. maximum foreign ownership in a Trading company is limited to 75%).