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Saudia-online Staff has researched and compiled this brief and easy to use Saudi Arabia Business guide for our visitors use, please if you would like us to add or modify any part of it just email us at Business 
    

FOREIGN INVESTMENT POLICY
The Kingdom of Saudi Arabia realizes that achieving its ambitious economic goals requires a steady flow of technology and expertise into the country. Therefore, its policy is to welcome foreign capital and invite it to participate in economic development projects in cooperation with Saudi business. The government's established policy is not to impose any restrictions on the movement of capital into and out of the Kingdom and always to respect private ownership.

In addition, foreign investment that fulfills the requirements of the Foreign Capital Investment Code enjoys all privileges of national capital and is entitled to the same treatment, protection, and incentives accorded to national capital. The Code requires that foreign capital be invested in economic development projects (which, under the Code, do not include petroleum and mineral projects) and that it be accompanied by technical knowledge. Development projects are defined by the Ministry of Industry and Electricity.

Provided that the share of national capital is at least 25 percent, industrial or agricultural projects that fulfill the above requirements enjoy the following benefits:

  • An income tax holiday of up to 10 years from the commencement of commercial production.

  • Ownership of land according to the regulations governing land ownership by non-Saudis.

  • For industrial projects, the same privileges as those enjoyed by Saudi capital under the National Industries Protection and Encouragement Regulations. These include:

  1. Exemption from customs duties on machinery, equipment, tools and spare parts imported for industrial products.

  2. Exemption from customs duties on primary raw materials, semi-finished goods, containers, etc., necessary for industrial projects (provided that similar items are not sufficiently available locally).

  3. Provision by the government of plots of land at a nominal rate for factories and residential quarters for workers.

  4. Low electricity and water rates.

  5. No restriction on repatriation of profits.

  6. Preferential treatment for local products in government procurement in addition to preferential treatment accorded to national products by Arab League and Saudi Arabian bilateral trade agreements.
    Saudia-Online.com

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PRESS RELEASE -- April 10, 2000Saudia-Online.com
Saudi Arabia Approves New Foreign Investment Law

In a landmark decision, Saudi Arabia Council of Ministers approved a new Foreign Investment Law on Monday, April 10th, following the recommendation of the Supreme Economic Council and the Majlis Al-Shura. King Fahd issued a Royal Decree approving the law, thus significantly revising the way foreign investment has been conducted in the Kingdom for more than 20 years.

The Council of Ministers also approved the establishment of the General Investment Commission, which will be responsible for proposing and implementing policies to promote foreign investment in Saudi Arabia, and for issuing investment licenses to foreign investors. H.R.H. Prince Abdullah bin Faisal bin Turki has been appointed as the new investment body governor, with the rank of Minister.

In a dramatic change from the previous investment law, the new Foreign Investment Law allows foreigners 100-percent ownership of the projects, as well as the property required for the project itself or for housing company personnel, while enabling them to retain the same incentives given to national companies. For example, projects that are 100 percent foreign-owned will be eligible for loans from the Saudi Industrial Development Fund. Investors will also be able to hold investment licenses in more than one type of activity. The new law has brought significant changes to the previous sponsorship regulations. Foreign investors and their non-Saudi employees will be sponsored under the new licensed firm.

Another very significant change is the reduction in the corporate tax rate for foreign companies with profits over SR100,000 a year, from 45 percent to 30 percent. The new law also enables companies to carry forward corporate losses for an unspecified number of years.

The General Investment Commission will work towards streamlining the foreign investment application process by creating a one-stop shop facility. It will be required to respond to investment applications within 30 days. If the Commission does not make a decision within this time frame, the license will be issued. If the Commission declines the application for some reason, the foreign investor is allowed to appeal the decision.

The new Foreign Investment Law will become effective 30 days after it is published in the Official Gazette.

UPDATES:

SAGIA rules stipulate that no license should be issued if the minimum FDI is less than SR25 million for a project in the agricultural sector, SR 5 million in the industrial sector, or SR2 million in the service sector.

RIYADH (Saudi Arabia), August 17, 2002 –

The Saudi Arabian General Investment Authority’s (SAGIA’s) Board of Directors approved several changes to the “Executive Rules of the Foreign Investment Act” on June 24, 2002 which were published in the local media on August 9, 2002.

 

The changes were primarily aimed at making the provisions more business-friendly by providing more flexibility to foreign investors and by strengthening the legal framework of investor rights in the Kingdom, particularly in relation to property ownership, parity with national companies and avoidance of double taxation. 

more...

Tax on Foreign Firms Slashed

JEDDAH, 29 April 2003 — Saudi businessmen have welcomed yesterday’s Shoura Council decision to cut taxes on profits of foreign companies from 45 percent to a maximum of 25 percent, saying the move will boost foreign investment              
more...

 

New Income Tax Act for non-Saudi and Gulf Cooperation Council (GCC) companies and individuals

In its weekly session held on 20/11/1424 (12/1/2004), The Cabinet endorsed a new income tax law for non-Saudi and Gulf Cooperation Council (GCC) companies and individuals doing business in the Kingdom. |more|

Additional Resources and Links

Read The Full New Investment Law Text

-New investment opportunities in Saudi Electricity Company
-Saudi Arabia's accumulated financial assets abroad amount to $ 650 billion |more|
-
Foreign investors pump $12.5 billion into Saudi projects |more|
-B
idding process for 2nd cellular-phone network license |more|
-
Saudi Electricity Co., Posts Profits of SR1.48 Billion |more|
-
Al Waleed expects Citigroup to halve share in SAMBA |more|

Activities exempted from the foreign investment Law. 

The Kingdom of Saudi Arabia has unveiled new rules and regulations for the ownership of real estate by foreigners

Shoura Council approves ownership of real estate by non-Saudis

Saudi Arabia Approves New Foreign Investment Law

License Application for a Service Project

License Application for an Industrial Project

License Application for a Agricultural Project

Down Loada

Sources: SAGIA, SPA, The Commercial office, Embassy of Saudi Arabia, Washington, D.C. and compiled by Saudia-Online staff

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