Foreign investors who come to Saudi Arabia can set up various types of companies. Among these, the holding company is a special vehicle that can be used for several purposes only.
From a legal point of view, the Saudi holding company can take two forms: that of limited liability and joint stock companies. Foreign entrepreneurs interested in developing operations under such a vehicle must meet various requirements and comply with the local regulations.
|Legal entities used||Private and public (joint stock) limited liability company|
|Standard incorporation with the Companies Register|
|Approx. 2 months|
Access to double tax treaties
It must have a registered address in Saudi Arabia
– 1 shareholder in the case of a private company,
– at least 2 shareholders in the case of a joint stock company
– approx. USD27,000 for private company,
– approx. USD134,000 for public company
|Taxation||Standard corporate tax of 20%|
|Control||Full control of the foreign shareholder when created as a joint stock company|
|Accounting and Reporting||Consolidated financial statements with its subsidiaries|
|Number of double taxation treaties||Approx. 50|
Our company formation agents in Saudi Arabia are at the service of those who want to create holdings in this country and on which we invite you to read more below.
Types of holdings that can be registered in Saudi Arabia
There are several types of holding companies that can be set up, based on their purpose and activities. These are:
- the pure holding company which implies owning shares in other companies;
- the financial holding company which is the second most met type of such enterprise and which holds only the financial assets in its subsidiaries;
- the mixed holding company which can partially engage in activities such as the production of goods, as well as owning shares in subsidiary entities.
- the immediate holding company with the main enterprise owning other holding entities;
The most important aspect to retain about a Saudi holding company is that its main purpose is to own various assets in other businesses called subsidiaries. The holding can have local or foreign subsidiaries.
If you want to open a holding in Saudi Arabia, our local experts are at your disposal with information on the main characteristics of such an enterprise.
Immigration to Saudi Arabia also enters the attention of our lawyers. We can assist people who want to come here to do business or work. For each case, the procedure is different, as it can require authorization from various organizations and government bodies. Contact us for support. If you are interested in starting a business in another country, such as Malta, we can put you in touch with our local partners.
Activities of holding companies in Saudi Arabia
Just like its name says, the main activity a holding company can have is the ownership of various assets in other entities called subsidiaries. This principle also applies in Saudi Arabia where such businesses can:
- control its subsidiaries, however, without getting involved in their daily management;
- own assets such as real estate, shares, intellectual property;
- coordinate the assets and resources of the companies it controls;
- distribute resources among subsidiaries.
When registered as a limited liability company, the Saudi holding company will have limited responsibility towards the obligations of its subsidiaries. This is one of its main advantages.
Should you decide to set up a holding company, you can let our company registration experts in Saudi Arabia handle the procedure, especially if you are a foreign investor who must meet specific requirements.
Holding company registration procedure in Saudi Arabia
The incorporation of a holding company in Saudi Arabia is the same as for any other legal entity. In the case of foreign investors, the shareholder can be a natural person or another company who will respect the Company Law.
Depending on the chosen legal form, there are various requirements to meet. For example, in the case of the limited liability company, the Saudi holding must have at least one shareholder and one director. The minimum share capital for such an entity is around 27,000 USD. Foreign investors must also apply for a SAGIA license which requires additional share capital resources, which is why we recommend using our company formation services in order to benefit from correct incorporation.
In the case of a joint stock company, the registration requirements are a little more stringent, in the sense that it requires at least 2 shareholders and 3 directors (who can be of any nationality). The minimum share capital for this legal entity is 134,000 USD or its equivalent in SAR.
As a general aspect, holding companies will usually exceed these amounts established as mandatory share capital since they are designed to own shares in various subsidiaries.
Our consultants can help with the incorporation of a Saudi holding company.
Advantages of a holding in Saudi Arabia
The Saudi holding company has various advantages, among which the limited liability towards its subsidiaries is the most important. Furthermore, it can also benefit from Saudi Arabia’s double tax treaties. Just like other companies, holdings must also register with the Saudi tax authority.
From a taxation point of view:
- holdings are subject to the standard corporate tax rate of 20%, however, their subsidiaries can engage in other activities taxed at different rates;
- they are also subject to a capital gains tax of 20%;
- service payment taxes may also apply at rates of 5% to 20%, depending on the type of service and who the beneficiary of the service is.
If you want to create a holding in Saudi Arabia and need assistance, contact us. Our Saudi company formation advisors are at your disposal with a wide range of services.