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Summary Of The Case Studies
Background: A foreign investor from Germany wants to set up a renewable energy company in Saudi Arabia, as part of the Kingdom’s Vision 2030 plan to diversify its economy and reduce its dependence on oil. The investor has expertise and experience in solar and wind power projects and wants to take advantage of the favorable climate and incentives offered by the Saudi government for this sector.
The investor needs to obtain a business license, register the company, open a bank account, and comply with the legal and tax requirements for doing business in Saudi Arabia.
Process: The investor follows these steps to set up the company:
- Request an attestation for a contract from the Ministry of Foreign Affairs (MOFA). This is a document that certifies the authenticity and validity of the contract between the foreign investor and the local partner or sponsor, if any. The contract must include the name, nationality, and share of each partner, the type and scope of the business activity, the capital and duration of the company, and other relevant details.
- Apply for a business license from the Ministry of Investment (MISA). This is the authority that regulates and facilitates foreign investment in Saudi Arabia. The investor must submit an online application through MISA’s website, providing information about the company, its shareholders, capital, activity, location, and expected economic impact. The investor must also provide supporting documents, such as the attested contract, a feasibility study, a technical report, a financial statement, a certificate of incorporation, a passport copy, and a bank statement. The application fee is SAR 2,000 (USD 533). MISA will review the application and issue the license within 10 working days if all requirements are met.
- Authenticate the establishment contract of the company and issue the commercial register with the Ministry of Commerce (MOCI). This is the authority that registers and regulates commercial entities in Saudi Arabia. The investor must submit an online application through MOCI’s website, providing information about the company, its shareholders, capital, activity, location, and legal form. The investor must also provide supporting documents, such as the attested contract, the MISA license, a certificate of incorporation, a passport copy, and a bank statement. The application fee is SAR 650 (USD 173). MOCI will review the application and issue the commercial register within five working days if all requirements are met.
- Open a local bank account. The investor needs to open a bank account in Saudi Arabia to deposit the company’s capital and conduct financial transactions. The investor needs to provide documents such as the MISA license, the commercial register, the passport copy, and a letter from MOCI confirming the share capital. The investor can choose from various banks operating in Saudi Arabia, such as Al Rajhi Bank, National Commercial Bank, Riyad Bank, Samba Financial Group, or Saudi British Bank.
- Comply with the legal and tax requirements. The investor needs to comply with various laws and regulations governing business operations in Saudi Arabia. These include labor law, social security law, zakat law, income tax law, value-added tax law, customs law, environmental law, intellectual property law, anti-corruption law, anti-money laundering law, and arbitration law. The investor also needs to file periodic reports and returns with various authorities, such as MISA, MOCI, General Authority of Zakat and Tax (GAZT), General Organization for Social Insurance (GOSI), Ministry of Human Resources and Social Development (MHRSD), Ministry of Environment Water and Agriculture (MEWA), Saudi Customs (SC), Saudi Food and Drug Authority (SFDA), Saudi Standards Metrology and Quality Organization (SASO), Saudi Intellectual Property Authority (SIPA), National Anti-Corruption Commission (Nazaha), Financial Intelligence Unit (FIU), and Saudi Center for Commercial Arbitration (SCCA).
Outcome: The investor successfully sets up a renewable energy company in Saudi Arabia within two months. The company started operating solar and wind power projects across various regions in the Kingdom. The company benefits from various incentives offered by the Saudi government for this sector, such as loans from Mutjadeda program, tax exemptions from GAZT, subsidies from Renewable Energy Project Development Office (REPDO), land allocation from Ministry of Municipal and Rural Affairs (MOMRA), grid access from Saudi Electricity Company (SEC), technical support from King Abdullah City for Atomic and Renewable Energy (KACARE), and market access from Saudi Energy Efficiency Center (SEEC). The company also contributes to the Saudi Vision 2030 goals of increasing the share of renewable energy in the power mix, creating jobs, attracting foreign investment, and enhancing environmental sustainability.