8 steps to Getting a Commercial License in Saudi Arabia for Your Business

Saudi Arabia’s business landscape is transforming rapidly, driven by Vision 2030 and pro-investor reforms. For foreign entrepreneurs and multinationals, obtaining a commercial license is the gateway to establishing operations in the Kingdom.

A commercial license in Saudi Arabia is the foundational document that authorizes foreign companies and investors to legally conduct business activities within the Kingdom. Issued by the Ministry of Commerce, this license is mandatory for all types of businesses, including limited liability companies and joint stock companies. Whether you are establishing a trading, manufacturing, or service-based business, securing a commercial license is the first step in the business setup process in Saudi Arabia. A successful business setup in Saudi requires securing the right commercial license, which is a crucial step in the overall process of starting a company in the country.

This guide walks you through the 8 essential steps to getting a commercial license in Saudi Arabia, explains the 2025 updates you must know, and provides practical insights to help you launch smoothly.

Who Needs a Commercial License in Saudi Arabia?

If you’re a foreign business looking to operate in Saudi Arabia, you’ll need approval from the Ministry of Investment (MISA) before registering your entity with the Ministry of Commerce (MoC). Establishing a legal entity is required for foreign investment, and international investors can set up as a foreign company in Saudi Arabia.

Key facts:

• Most sectors allow 100% foreign ownership (with some requiring sector approvals).
• Common structures include limited liability company (LLC), joint stock company (JSC), branches of foreign companies, and Regional Headquarters (RHQs).
• Tax rules: 20% corporate income tax applies to the foreign share, while Saudi/GCC-owned shares are subject to Zakat.

Step 1 — Get Your MISA Investor License

The MISA license is the first step for foreign-owned companies. It validates your business activity and allows 100% ownership where permitted.

Preparing the correct paperwork is crucial, as the documents required must be submitted accurately to ensure a smooth licensing process.

Requirements typically include:

• Parent company commercial registration.
• Audited financial statements.
• Power of attorney (attested and translated).

Once the MISA license is obtained and all required documents are submitted, the company formation process can proceed.

Step 2 — Reserve Your Trade Name & Draft Articles of Association

Once licensed, reserve your trade name through the MoC and prepare your Articles of Association (AoA). The AoA sets out governance rules, shareholder responsibilities, and activity scope. A well-structured AoA can help streamline the approval process by ensuring compliance with legal requirements.

Pro tip: Make sure your chosen activity code matches MISA, MoC, and Balady (municipality). Misalignment is one of the most common causes of delays.

Step 3 — Obtain the Commercial Registration (CR)

Your Commercial Registration (CR) is the official certificate of incorporation. The commercial register is now managed through an electronic service, allowing for streamlined processes in registration, updates, and compliance.

1. update:

• From April 3, 2025, CRs no longer expire annually, instead, companies must file an annual confirmation of CR information, and submit a UBO declaration during incorporation.
• You have 90 days from your CR anniversary date to confirm.
• Failure to confirm can suspend your CR for one year. The process of obtaining a commercial license in Saudi Arabia can often be completed within a few weeks to months depending on the business structure.

Step 4 — General Manager Onboarding and Portal Setup

Once you’ve secured your Entrepreneur License, one of the first critical steps is appointing a General Manager (GM). The GM is the legal representative of your company in Saudi Arabia and will be responsible for signing contracts, managing compliance, and representing the entity before government authorities and banks. Registering the GM officially with the Ministry of Commerce and linking their details to the Commercial Registration (CR) is mandatory.

After the GM is onboarded, your next focus should be on activating the core government portals that every business in Saudi Arabia must use:

• Qiwa: For managing work contracts, Saudization requirements, and issuing work permits.
• GOSI: To register employees and manage social insurance contributions.
• Mudad (WPS): For compliance with the Wage Protection System, ensuring salaries are paid on time and through approved channels.
• Muqeem: To handle residency permits (Iqamas) for foreign employees, including issuance, renewals, and transfers.

Step 5 — Bank Account and Financial Requirements

After your commercial registration is approved, the next critical step is to open a corporate bank account in Saudi Arabia. This account is essential for managing your company’s finances, processing payments, and fulfilling tax obligations. Foreign companies are required to deposit the minimum share capital as stipulated by their chosen legal structure, and obtain a certificate of deposit from the bank as proof.

To ensure full compliance, companies must adhere to the financial regulations set by the Saudi Arabian Monetary Agency (SAMA) and secure any necessary approvals from the Ministry of Commerce. Additionally, registration with the General Organization for Social Insurance is required to cover your employees, and companies involved in import or export must also register with the Customs Authority. Meeting these regulatory requirements is vital for smooth business operations and to avoid any legal or financial setbacks as you establish your business in Saudi Arabia.

Step 6 — Complete Post-CR Essentials

Once your commercial registration is in place, it’s time to complete the essential post-CR steps to ensure your business is fully compliant and ready to operate. If your company provides professional services, such as consulting, engineering, or healthcare, you’ll need to obtain a professional license specific to your business activities. This license is a prerequisite for offering specialized services in Saudi Arabia.

Step 7 — Set Up Labour & Payroll Portals

To effectively manage your workforce and meet Saudi Arabia’s labor regulations, companies must set up and activate labor and payroll portals. This process begins with registering your business with the Ministry of Labor and obtaining the necessary approvals to employ both local and foreign workers. Compliance with social insurance requirements is mandatory, ensuring that all employees are covered under the General Organization for Social Insurance.

Companies must also establish a robust payroll system to manage salaries, benefits, and deductions in line with Saudi labor laws. This includes adhering to the tax regulations set by the General Authority for Zakat and Tax (GAZT), as well as providing health insurance for employees. By setting up these systems, companies can streamline HR processes, maintain legal compliance, and support their teams effectively as they grow their business in Saudi Arabia.

Step 8 — Obtain a Municipal (Balady) License

The final step in the company setup process is obtaining a municipal (Balady) license from the local municipality. This license is required for businesses that operate from a physical location, such as retail stores, restaurants, or offices. To secure the municipal license, companies must comply with local health, safety, and zoning regulations, and submit the necessary documentation for approval. A service license allows businesses to engage in commercial activities providing services, excluding retail or wholesale activities.

Common Pitfalls to Avoid

1. Mismatched activity codes between MISA, MoC, and Balady.
2. Unverified National Address delaying banking setup.
3. Late CR confirmation post-April 2025 reforms.
4. Missing required documents leading to incomplete documentation and delays in licensing, incorporation, or compliance with government formalities.
5. Failure to activate WPS (Mudad) causing payroll compliance issues.

FAQs

Can I own 100% of my company in Saudi Arabia? Yes, in most sectors, provided you obtain a MISA license.

Do I need a local sponsor to set up a business in Saudi Arabia? No, most foreign investors do not require a local sponsor, especially when setting up an LLC or a branch. This offers greater control and legal advantages for foreign-owned businesses.

Do I still need to renew my CR annually? No. Since April 2025, only annual confirmation is required.

When must I register for VAT? If annual turnover exceeds SAR 375,000.

What’s the biggest cause of setup delays? Incorrect activity codes, incomplete documentation, and not obtaining the right license from MISA can all lead to significant delays.

Are there comprehensive services available to help with business setup? Yes, comprehensive services are available to guide investors through every step of the business setup process in Saudi Arabia, from licensing to government procedures, ensuring a smooth and efficient establishment.

Avoid Delays and Secure Your License Now

Saudi Arabia has simplified its company setup process, but compliance remains strict. The new 2025 CR law, VAT amendments, and mandatory labour portals make it vital to follow each step carefully. The streamlined setup in Saudi Arabia offers significant opportunities, but understanding the regulations around trading activities and commercial activity is essential for success.

At TASC, with over 18 years of experience, we’ve helped hundreds of businesses navigate this journey, whether securing licenses, managing Saudization, or ensuring WPS compliance.

Need help with your commercial license? Book a consultation with our experts today!