Step-by-Step Guide for Starting an LLC in Saudi Arabia

Saudi Arabia is supporting its economic diversification. Therefore, it creates the best conditions to attract foreign investors. One of the best options for who wants to invest is the creation of an LLC company in Saudi Arabia. This investment option stands out among several others for its practicality and popularity. Likewise, it is no secret to anyone that Saudi Arabia is a country with many riches. This makes it a very interesting country to invest in. In this article, you will learn what an LLC company in Saudi Arabia is and what are some of the advantages of having this type of company in this country. At the same time, we will also explain the documentation and procedures necessary for its creation, as well as some important financial aspects on this topic. Advantages of Establishing an LLC in Saudi Arabia Before getting into the matter, the acronym (LLC) stands for Limited Liability Company. In this sense, an LLC company in Saudi Arabia is one that binds its shareholders only with the company’s assets. That is, shareholders should not respond to their debtors with their personal assets. From this concept emerges the first advantage of establishing an LLC company in Saudi Arabia: The assets of the partners are different from the assets of the company An LLC company in Saudi Arabia is a common form of company. This is a legal entity different from the partners’ assets. Therefore, this means that the partners have a liability limited to the share capital they have in the company for its debts and obligations. In this sense, the company’s partners are not personally responsible for its debts and obligations beyond their initial investment, unless they have agreed otherwise in a contract. Flexibility regarding the ownership and management of the company The laws of Saudi Arabia require that for the creation of an LLC in the country, it is necessary to meet the requirement of at least having one or more shareholders, who may be natural or legal persons. The flexibility lies in the fact that, for example, foreign investors can establish an LLC company in Saudi Arabia with absolute ownership or by associating with Saudi or foreign citizens or national or foreign legal entities. Flexibility in the creation of company structures In this type of company, the partners are free to decide the shareholding of each of them. For their part, they can establish their functions. Also, they can appoint a registered manager, who will be in charge of managing the daily operations of the company. Doing business is simple The government of Saudi Arabia makes decisions to simplify the processes of creating these companies along with minimizing bureaucracy. Saudi Arabia is a country that is characterized by its ease of doing business. This means that the country implements the best conditions for investors. Possibility of doing business with the government LLC companies in Saudi Arabia have the advantage of being able to bid to participate in government contracts. These facilities are intended to promote greater dynamism of the local economy, especially small business and medium-sized businesses. Likewise, the Saudi government points out those LLCs have preferences in tenders and projects. Without a doubt, this facilitates and creates greater opportunities for growth and expansion in this type of company. Greater benefits and incentives regarding the payment of taxes The country offers LLC benefits and tax incentives. This means greater competitiveness between these types of companies. For example, the income tax rate for LLCs Company in Saudi Arabia is capped at 20%. On the other hand, in sectors such as manufacturing and software development, the maximum rate is 15%. Likewise, KSA has signed tax agreements with different countries with the objective of avoiding double taxation. Business Continuity An LLC company in Saudi Arabia can continue operations regardless of changes in ownership or management. That is, the company will continue to operate fully despite changes in shareholders or the departure of partners. As you can see, establishing an LLC company in Saudi Arabia brings a series of benefits to investors. The Saudi government is committed to creating the most favorable environment with the aim of diversifying its economy. Therefore, the processes of creating this type of company today are much simpler. Without a doubt, all the advantages mentioned above make Saudi Arabia a much more attractive option. In general terms, investors can take advantage of the different benefits that an LLC company in Saudi Arabia offers to position their company in the dynamic and prosperous Saudi market. Essential Documents for a Smooth LLC Formation To register an LLC company in Saudi Arabia, the following documentation is required: Registration request Investors must submit and complete an LLC registration application with the Ministry of Commerce and Industry of Saudi Arabia. In this sense, this application must contain basic information about the company to be formed, such as the name of the LLC, the address of the headquarters, the commercial activity, and the ownership structure, among other important aspects. Company statutes LLC partners must agree on the bylaws of their company. The bylaws are the rules that will govern the operation and management of the LLC. The statutes should include information about the partners, their shareholding, the distribution of profits and losses, and other important details. Partnership contract Apart from the company’s bylaws, partners must agree to the terms and conditions of their partnership contract. Unlike the company’s statutes that govern its operation, this association contract will govern the relationships between the partners. In this sense, this partnership contract must include information on the rights and responsibilities of each partner, as well as the procedures for making decisions and the form of entry or exit of partners. Identification copies For its part, you must provide copies of valid identification of the partners and the registered manager of the LLC. This may include passports, national ID cards, or other identification documents valid in the country. Proof of payment of social capital contributions Partners must present proof of payment of