The branch office in Saudi Arabia is incorporated following the regulations prescribed by the Foreign Investment Law. A foreign company applying to register a branch office in this country may receive the right to do so only for specific activities, as the branch office is prohibited for certain operations, such as trading activities. Investors interested in how to open a company in Saudi Arabia should know that the branch office is also known as a permanent branch and that the business establishment can be set up without having a Saudi partner.
Our team of consultants in company formation in Saudi Arabia can provide in-depth advice on the documents that are required in this case.
Foreign country’s legislation
Best Used For
|Various activities, from commercial to technical activties, depending on the parent company’s object of activity|
Minimum share capital (YES/NO)
SAR 500,000 for the SAGIA license
|Time frame for the incorporation (approx.)||
Approx. 7 months
|Documents to be filed by parent company||
– Articles of Association,
– Certificate of Registration,
– power of attorney for the local representative
Local manager required
|Legal representative required (YES/NO)||
|Local bank account (YES/NO)||
|Independence from the parent company||
Dependent on the parent company, required to conduct the same activities
|Liability of the parent company||
Liable for debts and obligations incurred by the branch
|Corporate tax rate||
20% on the income generated in Saudi Arabia
|Annual accounts filing requirements||
– annual tax returns,
– audited financial statements
|Possibility of hiring local staff (YES/NO)||
|Travel requirements for incorporating branch/subsidiary (YES/NO)||
No, local agent services can be acquired
|Double tax treaty access (YES/NO)||Yes|
Incorporation requirements for a branch office in Saudi Arabia in 2023
When opening a branch office in Saudi Arabia in 2023, the foreign company will have to satisfy specific requirements. For example, it is necessary to provide a minimum share capital of SAR 500,000. However, the capital requirements may increase depending on the business activities that will be performed by the foreign company in Saudi Arabia.
The procedure for setting up a company in Saudi Arabia which will perform its business activities through a branch office stipulates that the foreign entity must obtain a license issued by the Saudi Arabian General Investment Authority (SAGIA).
Some of the most important documents that are to be provided by the parent company applying to open a branch office are the following:
• copy of the company’s certificate of incorporation;
• copy of the parent company’s articles of association and memorandum;
• the power of attorney, attested by the Saudi consulate;
• payment of specific fees.
We can assist foreign companies interested in setting up branch offices in Saudi Arabia in 2023. Our specialists can help you start a business in Saudi Arabia in the shortest time possible.
We can also offer guidance in immigration to Saudi Arabia.
Anyone planning to immigrate to Saudi Arabia must first apply for a visa. Please be aware that you must have two blank visa pages in your passport that must also be valid for at least 6 months in order to be granted a visa. You should also consider that you will need a sponsor to move here, even for a short while.
Please be aware of the fact that a regular visa does not grant you the freedom to enter and leave the country whenever you want. You require a unique visa for multiple entries or a Saudi residence permit that comes with more rights. Contact us for information on the importance of the Iqama document.
The main characteristics of branches in Saudi Arabia
Foreign companies interested in expanding their operations in Saudi Arabia have several types of entities they can operate under. Among these are the following:
- technical and scientifical office that can be employed to offer support to Saudi companies;
- liaison offices, also known as representative offices, that are not allowed to engage in commercial activities;
- joint ventures that can operate in partnerships with local companies;
- branch offices that can engage in commercial activities and fall under the total control of the parent company.
You can find information on the branch office in the infographic below:
Out of all entities, the branch office can be the most appropriate business form for expanding operations in Saudi Arabia. As main characteristics, it should be noted that the branch office:
- can only complete the same activities as the parent company;
- the foreign enterprise is required to apply for the licenses related to the operations of the Saudi branch;
- the parent company will be liable for the debts and other obligations of the branch office;
- the foreign company can appoint a person from its headquarters to represent it in Saudi Arabia, however, the respective individual must obtain a work permit;
- the minimum share capital to set up a branch in Saudi Arabia is 500,000 SAR.
In certain cases, foreign companies interested in expanding their operations through Saudi branch offices must also have a business established in another Gulf Cooperation Council (GCC) member state.
Our Saudi company formation advisors are at your service with detailed information on the requirements to meet in order to create branch offices in this country. Our immigration lawyers in Saudi Arabia can advise on how to bring foreign employees here.
What to consider when opening a branch in Saudi Arabia
There are several aspects to take into account upon the establishment of a branch office in Saudi Arabia, among which is the fact that it must bear the same name as the parent company. Also, this type of entity is not considered a legal business form, but an extension of the main company, thus it has no decision-making power in respect to its activities.
Also, even if it operates as an extension, the branch office must have a legal address in a Saudi city. This will enable it to access certain financial benefits, such as double taxation avoidance.
The branch is limited in the activities it will undertake to those of the parent company, which is why it is mainly employed in the financial sector.
The branch office is suitable for both medium and large-sized companies and foreign companies can set up more than one entity in Saudi Arabia.
We provide tailored support to foreign single investors and companies interested in accessing the Saudi market by setting up a business here. Our company registration advisors in Saudi Arabia will answer all your questions related to starting an enterprise here, including on immigration to Saudi Arabia.
All those interested in relocating to Saudi Arabia and making investments in Saudi Arabian companies are eligible for the residence visas. Our immigration specialists can help you with the entire visa process, including with the procedure of obtaining the Iqama in Saudi Arabia. Get in touch with us for complete information on our services.
Bank account opening and licensing requirements for a Saudi branch
Two of the important aspects to consider when operating a business in Saudi Arabia are the opening of a bank account that needs to be set up by the parent company and obtaining the necessary licenses with the local authorities.
In terms of bank account creation, the parent company can choose a national Saudi bank or an establishment of a foreign bank (in certain cases, banks from the foreign business’ home state operate here, which is a good option for these). In it, the parent company will deposit the share capital and once the operations begin, all financial transactions will be completed through it.
When it comes to licensing, the parent company is required to prepare and file all the required documents with the Saudi agency in charge of representing and administering the industry to operate in. Specific authorizations must be obtained in the financial and insurance fields.
If you want to set up a branch in a specific sector and need guidance, we are at your service with information and assistance.
The absence of bureaucracy for foreigners is an advantage for those seeking immigration to Saudi Arabia. Our local specialists can assist foreign workers and their families in obtaining employment and residency permits. When you arrive in the nation, our agents will also serve as your guide through other legal hurdles you might face.
Incorporation advantages in Saudi Arabia
The 2023 Company Law intends to further the Vision 2030 of the Saudi Arabian Kingdom. Its goal is to strengthen and grow Saudi Arabia’s economic structure. The corporations’ tasks must be made easier, and they must be given the tools they need to keep up the pace of their expansion and growth. Only seven years after the publication of the Companies Law, which is still in effect, the law results in a reform of company law, demonstrating Saudi Arabia’s dynamism in changing its legal system. Whether a company is for profit, nonprofit, or professional purposes, it is subject to regulation under the new Companies Law. This will guarantee that every regulation is governed by a single act.
Our team of specialists in company formation in Saudi Arabia can advise foreign businessmen on the main advantages of setting up a branch office in 2023. As a general rule, it is important to know that the branch office is incorporated in a similar manner prescribed for the limited liability company in Saudi Arabia. One of the main advantages is that, during the registration, the businessmen will not need to draw new articles of association. Also, the branch office may engage in various public and private activities, depending on the company’s main operations.
You can also rely on for support in accounting matters.
The management of your company’s accounts and bookkeeping is something our accountants in Saudi Arabia can handle for you in order to efficiently maintain your financial situation by making use of our resources. We provide packages or options that you may choose from based on your individual needs, and our full range of services are accessible for a set price.
We also invite you to watch our video below:
Taxation of branch offices in Saudi Arabia
The taxation of companies in Saudi Arabia relies on residency. In the case of branches, however, the corporate tax imposed by the Tax and Customs Authority will target only the income it generates here.
As a permanent establishment, the branch office can benefit from the provisions of double tax treaties provided that it operates in Saudi Arabia for a specific period.
Here are the main taxes to be paid by a branch office in Saudi Arabia:
- the corporate tax which is levied at a rate of 20% for most companies (exceptions apply to oil and gas businesses);
- the value added tax which is levied at a standard rate of 5%;
- the capital gains tax which is applied at a rate of 20%.
Investors can find out more details on the registration of a branch office from our representatives. Please contact our team of agents in company formation in Saudi Arabia for consultancy services and advice. Feel free to address our immigration lawyers in Saudi Arabia for support in moving here.