Can Foreigners Own 100% of a Business in Saudi Arabia?

Yes, foreigners can own 100 percent of a business in Saudi Arabia. Since a transformative regulatory overhaul in 2019, the Kingdom has progressively eliminated the requirement for Saudi partners in most commercial sectors. This change, implemented through amendments to the Foreign Investment Law and administered by the Ministry of Investment (MISA), ranks among the most consequential business reforms under Vision 2030.

Historical Context

Before the reform, foreign companies were generally required to have a Saudi partner holding at least 25 percent equity in joint ventures. This requirement, rooted in protectionist policies from earlier decades, created significant barriers to foreign direct investment and often resulted in complex partnership arrangements that deterred multinational corporations from establishing meaningful operations in the Kingdom.

The 2019 changes, refined through subsequent ministerial decisions in 2020 and 2021, removed the mandatory local partnership requirement across the vast majority of economic activities. The reform was part of a broader effort to attract USD 100 billion in annual FDI by 2030, a target that has driven regulatory liberalization across multiple domains.

Sectors Open to Full Foreign Ownership

The vast majority of commercial and industrial sectors are now open to 100 percent foreign ownership. These include manufacturing, information technology, consulting, engineering, construction, logistics, hospitality, healthcare, education, retail, and wholesale trade. The opening of the retail sector was particularly significant, as it had previously been restricted to Saudi-owned entities.

The Professional Companies Law, enacted in 2022, further expanded opportunities by allowing foreign professionals in fields such as law, accounting, architecture, and engineering to establish fully foreign-owned practices, subject to licensing from the relevant professional regulatory bodies.

The Negative List

While most sectors are open, Saudi Arabia maintains a negative list of activities restricted from full foreign ownership. This list, published and periodically updated by MISA, includes certain defense-related industries, upstream oil and gas exploration (which remains the domain of Saudi Aramco and its licensed partners), some media activities, and specific services in Makkah and Madinah related to Hajj and Umrah.

The negative list has been progressively shortened since 2019, with several previously restricted activities including real estate brokerage and certain educational services being opened to foreign investors. MISA conducts annual reviews of the list in consultation with sector regulators.

MISA Licensing Process

To establish a fully foreign-owned company, investors must obtain an investment license from MISA. The process has been significantly digitized through the MISA Invest Saudi portal. Key steps include submitting a business plan, providing audited financial statements from the parent company for the previous year, demonstrating minimum capital requirements (which vary by activity but start at SAR 500,000 for most services), and obtaining sector-specific approvals where applicable.

Processing times have improved markedly. Standard licenses are now issued within five to ten business days for straightforward applications, compared to several months under the previous regime. MISA also offers expedited processing for strategic investments exceeding SAR 50 million.

Entity Structures Available

Foreign investors can establish several types of entities under full ownership. The most common is the Limited Liability Company (LLC), which requires minimum capital of SAR 500,000 for most activities. Joint Stock Companies (JSCs) are available for larger operations. Branch offices and representative offices offer lighter structures for companies testing the market, though branch offices generate the same tax obligations as fully incorporated entities.

Special Economic Zones, including KAEC, the Integrated Logistics Bonded Zone in Riyadh, and zones in Jazan, Ras Al-Khair, and cloud computing cities, offer additional incentives for foreign-owned businesses, including reduced tax rates, customs exemptions, and streamlined labor regulations.

Tax Implications

Foreign-owned companies are subject to a 20 percent corporate income tax on Saudi-sourced profits, compared to the 2.5 percent zakat obligation that applies to Saudi and GCC-owned businesses. However, companies operating within designated Special Economic Zones may benefit from reduced corporate tax rates of as low as 5 percent for qualifying activities.

Withholding taxes apply to certain cross-border payments, including 5 percent on dividends, 15 percent on royalties, and varying rates on management fees and technical services. Saudi Arabia’s growing network of double taxation treaties, covering over 60 countries, provides relief in many cases.

Competitive Landscape

The reform has had measurable impact. FDI inflows into Saudi Arabia reached approximately USD 25 billion in 2024, a substantial increase from USD 4.6 billion in 2019. Over 900 multinational companies had established or were establishing regional headquarters in Riyadh by early 2026, with most operating as fully foreign-owned entities.

The combination of full ownership rights, no personal income tax, a large domestic market of 36 million people, and the Kingdom’s strategic position as a gateway to the wider MENA region has made Saudi Arabia increasingly competitive with established regional hubs such as the UAE and Bahrain.