Top 5 Benefits of Opening a Foreign Branch in Saudi Arabia

Since the inception of the RHQ programme in 2021, nearly 600 global companies had set up their regional bases in Saudi Arabia. In addition to regional headquarters, branch offices have become a common way for international companies to establish a physical presence in the Kingdom. This initiative is part of the Kingdom’s broader Vision 2030 economic diversification plan and is aimed at attracting multinational companies to set up their regional headquarters in Saudi Arabia by offering significant incentives, including tax exemptions and streamlined licensing processes.

This strategic transformation has fueled a surge in foreign direct investment (FDI), regulatory reforms, and industry diversification. In 2023 alone, Saudi Arabia attracted USD 25.5 billion in FDI, a 16% increase over targets and a 50% jump from the previous year. Government support and legal structure reforms have made it easier for foreign entities to establish branches and achieve business growth in the Saudi market.

For companies looking to expand, Saudi Arabia offers an unmatched combination of growth potential, regulatory ease, and strategic positioning. The legal structure of foreign branches allows international companies to expand efficiently without creating a separate legal entity, making it an attractive option for rapid market entry and business growth. Whether you’re an SME or a multinational, setting up a foreign branch here is more than a market entry, it’s a smart, future-forward investment.

Here are the top 5 reasons why now is the right time to open a foreign branch in Saudi Arabia, and how TASC can be your trusted partner on this journey. The process to establish branches is aligned with Vision 2030, and government support plays a key role in facilitating this expansion for foreign entities and international companies.

1.    Strategic Location Connecting Global Markets.

Saudi Arabia occupies a unique strategic position, serving as a critical global hub for trade and logistics. The Kingdom provides direct access to some of the world’s busiest international shipping routes, including the Red Sea and the Arabian Gulf, reinforcing its economic significance on the global stage.

Bridging three continents, Saudi Arabia offers businesses an operational advantage by reducing both transit times and logistics costs. Furthermore, its geopolitical standing within the GCC strengthens its role as a gateway to the Gulf’s oil-rich economies, providing businesses with a springboard to expand and thrive across the region. Establishing a branch office in Saudi Arabia also enables companies to access the local market directly and tap into opportunities within the private sector, supporting growth and recognition.

2.    Business-Friendly Legal Reforms.

The Kingdom has undertaken significant legal reforms aimed at fostering a more welcoming environment for foreign investors. After these reforms, investors can choose between establishing a foreign company branch or forming a limited liability company. A foreign company branch operates as an extension of the parent company and is not a separate legal entity, while a limited liability company is an independent legal structure with its own rights and obligations. The branch office in Saudi Arabia is governed by the Foreign Investment Law, ensuring a clear regulatory framework for foreign entities.

Most notably, the removal of the local partner requirement now allows 100% foreign ownership in the majority of sectors. This regulatory shift offers significant opportunities for foreign investors, as the Saudi government actively encourages foreign investment by allowing 100% foreign ownership in many sectors under Vision 2030.

• Legal Certainty: Clear regulations and codified laws minimise ambiguity and mitigate legal risks, with a legal representative required to ensure compliance with local regulations for both limited liability companies and foreign company branches.
• Increased Investor Appeal: Full ownership rights, coupled with initiatives like the Saudi Green Card for expatriates, enhance Saudi Arabia’s attractiveness to global investors.
• Enhanced Dispute Resolution: The introduction of specialised business courts and professional dispute handling ensures efficient and transparent resolution of commercial conflicts.

3.    Unlock Opportunity in One of the World's Fastest-Transforming Economies.

Saudi Arabia is undergoing a historic economic transformation under Vision 2030, rapidly reducing its dependence on oil and unlocking expansive new opportunities across diverse sectors. The International Monetary Fund forecasts a 3.5% GDP growth in 2025, reflecting the resilience and momentum of this diversification strategy. Why Invest in Saudi Arabia? Foreign investors stand to gain by:

• Tap Into High-Growth Sectors: Construction, tourism, entertainment, and industrial services are experiencing rapid expansion fueled by targeted government investments, regulatory support, and national infrastructure programs.
• Strategic Leverage Through the Public Investment Fund (PIF): The PIF actively drives investment by facilitating joint ventures, offering generous fiscal incentives, and providing streamlined access to land, capital, and key resources.
• A More Open and Investor-Friendly Business Climate: Sweeping legal reforms have simplified and accelerated the process of establishing and operating a business making market entry faster, more transparent, and less risky than ever before.

4.    High Consumer Purchasing Power.

Saudi Arabia boasts a young, dynamic population with considerable purchasing power, reflected in its high per capita GDP and robust retail spending figures. This has made the Kingdom a magnet for premium brands across sectors such as luxury goods, food and beverages, and innovative consumer products.

Urban centres like Riyadh, Jeddah, and Khobar have evolved into prime markets for high-end products and services, driven by changing consumer preferences and a shift towards experience-oriented spending. For business owners and investors, this translates into a vibrant, opportunity-rich market, especially for premium and high-quality offerings.

5.    Digital Transformation Driving Business Efficiency.

Ranked 4th globally in the UN Digital Services Index and 6th in e-Government maturity, Saudi Arabia is at the forefront of digital governance, operating under 100% digital regulations.

Initiatives such as Nafith enable seamless online company registration and trade facilitation, significantly reducing setup time and operational costs. Additionally, a tech-savvy, digitally literate population ensures rapid market adoption and offers businesses scalable growth opportunities.

Open Your Foreign Branch in Saudi Arabia Seamlessly with TASC.

For foreign investors, Saudi Arabia offers far more than just a market expansion opportunity, it is a chance to anchor your business in one of the world’s fastest-growing economies. With the market still in a high-growth phase, now is the ideal time to establish your presence before competition intensifies.

At TASC, we empower businesses with comprehensive support, from market entry strategy and company formation to compliance and operational services.

Let TASC Outsourcing be your strategic partner in Saudi Arabia! Don’t miss your opportunity to grow in one of the world’s fastest-emerging markets. Reach us out now and take the first step towards a seamless, successful launch in Saudi Arabia, and unlock new business opportunities.