Saudi Arabia
Investment climate in Saudi Arabia
Saudi Arabia’s 27 million increasingly prosperous consumers are at the heart of the Middle East/North Africa (MENA) region’s 400 million-strong population. One of the world’s 25 largest economies (23th), and No.1 in the MENA region, Saudi Arabia ranks 13th out of 183 countries for the overall ‘Ease of Doing Business’, according to the International Finance Corporation/World Bank’s ‘Doing Business’ report in 2011. The Kingdom is one of the fastest-growing countries worldwide, with per capita income forecast to rise from $20,700 in 2007 to $33,500 by 2020. In addition, Saudi Arabia is also the top foreign investment destination in the Arab world and among the top 20 globally. As you can see, Saudi Arabia is an exciting and rewarding place to invest and do business.
You can rest assured that you will find no better partner than the Saudi Arabian government in supporting your investment in the Kingdom. With account surpluses consistently in excess of 25% of gross domestic product, Saudi Arabia has ample capital to move the Kingdom forward by making large investments in targeted areas of growth. The Saudi economy is supported by one of the world’s most stable currencies (the Saudi Riyal) and by low inflation. You will find that, at all levels, the Saudi government is dedicated to supporting the growth of your business in the Kingdom
Saudi Arabia is more than ready to meet your investment needs through its progressive regulatory and generous financial incentives.
Regulatory incentives
The government is also committed to reducing bureaucracy at all levels and transforming government departments in an effort to support foreign investment. H.M. King Abdullah chairs the Saudi Supreme Economic Council, which is in charge of overseeing privatization and encouraging foreign investment. In 2000, the Saudi government announced a new Foreign Investment Law, introducing major regulatory incentives including (but not limited to):
- The establishment of the Saudi Arabian General Investment Authority (SAGIA), to assist foreign investors in the application and approval process for operating in the Kingdom.
- Accelerated investment application, business registration and set-up process, with a guaranteed decision for foreign investment applications within thirty (30) days of submission to SAGIA.
- Equal benefits, incentives and guarantees for foreign investors and domestic companies.
- 100% foreign ownership of companies and property.
- 100% property ownership for foreign investors.
- No minimum capital requirement
- No restrictions on repatriation of capital
- The ability for foreign investors to sponsor foreign employees.
Financial incentives
No personal income taxes and only a 20% corporate tax.
Ability to carry forward losses on balance sheets indefinitely.
Foreign investors have access to generous regional and international financial programs, including:
- Arab Fund for Economic and Social Development (AFESD): Participates in financing economic and social development projects in Arab countries.
- Arab Monetary Fund: Promotes the development of Arab financial markets and trade among member states; advises member states on investment of resources.
- Arab Trade Financing Program: Provides medium and long-term loans to individuals and organizations for private and commercial trade.
- Inter-Arab Investment Guarantee Corporation: Provides insurance coverage for inter-Arab investments and export credits against commercial and non-commercial risks.
- Islamic Development Bank: Participates in equity capital and grants loans for productive projects and enterprises. It accepts deposits to mobilize financial resources through Shari'a compatible avenues.
Other financial incentives to realize the full potential of your investments in the Kingdom include (but are not limited to):
- The Human Resources Development Fund to support activities related to qualifying, training and recruitment of Saudi labor.
- Preferential allocations of natural gas.
- Competitive industrial utility rates for water, power and land.
- Large research and development endowments at King Abdullah University for Science and Technology (KAUST) and King Abdul Aziz City of Science and Technology (KACST).
Tax incentives
The government of Saudi Arabia has granted tax concessions to six less-developed regions in the Kingdom, with the intention of attracting more investment. These tax privileges are granted for a period of ten years from the start of any project. The tax cuts will be offered in the following regions:1. Ha’il
2. Jazan
3. Najran
4. Al-Baha
5. Al-Jouf
6. Northern Territory
The benefits are as follows:
50% deduction from the expenses of annual training for Saudis
50% deduction from the annual salaries paid to Saudis
More deductions are granted if investment capital for any project exceeds SR 1,000,000 and if more than five employees of Saudi nationality have jobs of a technical or administrative nature with contracts of at least one year.