{"id":8203,"date":"2022-07-26T09:54:25","date_gmt":"2022-07-26T09:54:25","guid":{"rendered":"https:\/\/www.creationbc.com\/?p=8203"},"modified":"2024-09-11T08:31:40","modified_gmt":"2024-09-11T08:31:40","slug":"is-a-branch-company-in-saudi-arabia-the-right-structure-for-your-business-expansion-plans-needs","status":"publish","type":"post","link":"https:\/\/www.creationbc.com\/en-sa\/news\/is-a-branch-company-in-saudi-arabia-the-right-structure-for-your-business-expansion-plans-needs\/","title":{"rendered":"IS A BRANCH COMPANY IN SAUDI ARABIA THE RIGHT STRUCTURE FOR YOUR BUSINESS EXPANSION PLANS &#038; NEEDS?"},"content":{"rendered":"<p>[vc_row][vc_column][vc_column_text]<span style=\"font-weight: 400;\">A branch office is a common legal structure for foreign <a href=\"https:\/\/www.creationbc.com\/en-sa\/company-formation-saudi-arabia\/\">companies looking to expand their business and operations in Saudi Arabia<\/a>. A branch of a foreign company requires a license from the Ministry of Investment (MISA).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Under Saudi Arabian Foreign Investment regulations, international companies may establish a foreign company branch in the Kingdom with 100 percent ownership. As appose to a commercial agent, a branch has a more direct presence.\u00a0Branches are restricted to an administrative role and may not engage in trading activities. Despite this, a branch office can be especially useful for a foreign company as a liaison office. A branch office offers the benefits of a physical presence without the formal requirements of a joint-venture company.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There is no legal distinction between a branch and the foreign business itself. Therefore, the business activities of the branch will be limited to those of the foreign company, and liability for the debts and other liabilities of the branch will be transferred to the foreign company.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The incorporation process to register a branch in Saudi Arabia is alike to registering a limited liability company (LLC) in Saudi Arabia. Below we have listed the requirements for registering a branch in KSA, an overview of the documentation, eligible activities to incorporate a branch in Saudi, and the key differences \/ pre-requisites for branch registration compared to an LLC registration in Saudi. <\/span>[\/vc_column_text][vc_btn title=&#8221;BOOK A FREE CONSULTATION&#8221; style=&#8221;3d&#8221; align=&#8221;center&#8221; i_align=&#8221;right&#8221; i_type=&#8221;typicons&#8221; i_icon_typicons=&#8221;typcn typcn-chevron-right&#8221; add_icon=&#8221;true&#8221; link=&#8221;url:%2Fcontact-us%2F&#8221;][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h2><span style=\"color: #029c7e;\"><b>WHAT ARE THE REQUIREMENTS FOR REGISTERING A BRANCH IN SAUDI ARABIA?<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It is mandatory that the foreign company has existed for 3+ years and to provide proof.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The paid-up capital required must be the same as a subsidiary.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The paid-up capital must be deposited into a local Saudi corporate bank account for the branch.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The parent company adopts full liability for the Saudi branch.<\/span><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-8212\" src=\"https:\/\/www.creationbc.com\/wp-content\/uploads\/2022\/07\/what-are-the-requirements-for-registering-a-branch-in-saudi-arabia.jpg\" alt=\"what are the requirements for registering a branch in saudi arabia\" width=\"750\" height=\"563\" title=\"\" srcset=\"https:\/\/www.creationbc.com\/wp-content\/uploads\/2022\/07\/what-are-the-requirements-for-registering-a-branch-in-saudi-arabia.jpg 750w, https:\/\/www.creationbc.com\/wp-content\/uploads\/2022\/07\/what-are-the-requirements-for-registering-a-branch-in-saudi-arabia-300x225.jpg 300w\" sizes=\"auto, (max-width: 750px) 100vw, 750px\" \/><\/p>\n<p>&nbsp;<\/p>\n<h2><span style=\"color: #029c7e;\"><b>WHAT DOCUMENTS ARE REQUIRED TO SET UP A BRANCH COMPANY IN KSA?<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Copies of the commercial registration\/license and the parent company Memorandums and Articles of Association are to be duly translated and attested by the Ministry of Foreign Affairs and the Saudi Embassy.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The shareholders need to draft a document with the decision\/request to open the branch in Saudi. This document must be duly translated and attested by the Ministry of Foreign Affairs and the Saudi Embassy.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A drafted document detailing the decision to appoint the Saudi branch general manager. This document must be duly translated and attested by the Ministry of Foreign Affairs and the Saudi Embassy.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A copy of the residence proof of the newly appointed KSA branch manager along with a copy of their passport and details of all partners.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Company\u2019s financial proof to display profit. This document is to be duly translated and attested by the Ministry of Foreign Affairs and the Saudi Embassy.\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><span style=\"color: #029c7e;\"><b>WHAT BUSINESS ACTIVITIES ARE ELIGIBLE TO REGISTER A BRANCH IN SAUDI ARABIA?<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Services\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Industrial\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Trading<strong><sup>1<\/sup><\/strong><\/span><\/li>\n<\/ul>\n<hr \/>\n<p style=\"padding-left: 40px;\"><strong><em><sup>1<\/sup>With a condition of contributing an initial capital contribution of SAR 30 million.<\/em><\/strong><\/p>\n<p style=\"padding-left: 40px;\"><em><span style=\"font-weight: 400;\">It is also worth mentioning that foreign companies wishing to practice \u201cprofessional<strong><sup>2<\/sup><\/strong><\/span><span style=\"font-weight: 400;\">\u201d activities in KSA must keep a minimum of 25% Saudi partner. Therefore, in this instance, a branch of a foreign entity would not own 100 percent shares of a \u201cprofessional\u201d company.<\/span><\/em><\/p>\n<hr \/>\n<p style=\"padding-left: 40px;\"><strong><em><sup>2<\/sup>Consulting services (IT, Insurance, Real estate, Tax, Accounting, Architectural, engineering, etc.)<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<h2><span style=\"color: #029c7e;\"><b>KEY DIFFERENCES BETWEEN SETTING UP A BRANCH COMPANY IN SAUDI ARABIA <\/b><b>VERSES SETTING UP AN LLC COMPANY IN SAUDI ARABIA<\/b><\/span><\/h2>\n<p>&nbsp;<\/p>\n<table>\n<tbody>\n<tr>\n<td><\/td>\n<td style=\"text-align: center;\"><strong>Branch Of Foreign Company<\/strong><\/td>\n<td style=\"text-align: center;\"><strong>LLC<\/strong><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Minimum Capital Required<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Determined by MISA<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">50,000 SAR<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Minimum Shareholder<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">N\/A<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Min 1 shareholder max 50 shareholders)<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Limited Liability\u00a0<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">No<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Corporate Tax on Annual profits<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Ability to bid for government contracts\u00a0<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Ability to Trade\u00a0<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">No<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">File Annual Tax return<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Required<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Required<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">File Annual final statements<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Required<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Required<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Appoint Auditor\u00a0<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Required<\/span><\/td>\n<td style=\"text-align: center;\"><span style=\"font-weight: 400;\">Required<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Losses Exceed\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">50% of Capital<\/span><\/td>\n<td>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">(a) Should losses exceed 50% of capital.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">(b) Shareholders are not personally liable for LLC debts.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">(c) Shareholders to meet within 90 days &amp; agree to dissolve or continue business &amp; publish the decision.<\/span><\/p>\n<\/td>\n<td>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">(a) Foreign company\u2019s liability is not restricted to the amount of the branch\u2019s capital.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">(b) Should losses exceed 50% of capital, the shareholders to meet within 90 days &amp; agree to dissolve or continue the business.<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h2><span style=\"color: #029c7e;\"><b>TAKEAWAY<\/b><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">There are various procedures and requirements that you need to prepare and take into consideration to successfully operate a branch company in Saudi Arabia. From <\/span><a href=\"https:\/\/www.creationbc.com\/en-sa\/company-formation-saudi-arabia\/business-license-types\/\"><span style=\"font-weight: 400;\">selecting the right structure for your <\/span>company<\/a><span style=\"font-weight: 400;\"> drafting the correct documentation to business license and office registration, visa services, banking support, accounting, bookkeeping, payroll, and tax services <\/span><span style=\"font-weight: 400;\">Creation Business Consultants<\/span><span style=\"font-weight: 400;\"> will help you throughout the entire process. Our team of experts will leverage our experience to help simplify the process while simultaneously providing you with all the details needed to set up your company in Saudi Arabia and the GCC.\u00a0<\/span><span style=\"font-weight: 400;\">Contact<\/span><span style=\"font-weight: 400;\">\u00a0a member of our team\u00a0for your free expert consultation, email <\/span><a href=\"mailto:info@creationbc.com\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">info@creationbc.com<\/span><\/a><span style=\"font-weight: 400;\">\u00a0or\u00a0call\u00a0<\/span><span style=\"font-weight: 400;\">Saudi Arabia at <a href=\"tel:+966545112494\" target=\"_blank\" rel=\"noopener\">+966 54 511 2494<\/a>\u00a0<\/span><span style=\"font-weight: 400;\">UAE <\/span><a href=\"tel:+971%204%20878%206240\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">+971 4 878 6240<\/span><\/a> <span style=\"font-weight: 400;\">today.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p><em><strong>Written by Creation Business Consultants Business Development Team<\/strong><\/em>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_column_text]A branch office is a common legal structure for foreign companies looking to expand their business and operations in Saudi Arabia. A branch of a foreign company requires a license from the Ministry of Investment (MISA). Under Saudi Arabian Foreign Investment regulations, international companies may establish a foreign company branch in the Kingdom with 100 [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":8210,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[98,100],"tags":[],"class_list":["post-8203","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sa-company-setup","category-sa-taxes"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/posts\/8203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/comments?post=8203"}],"version-history":[{"count":18,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/posts\/8203\/revisions"}],"predecessor-version":[{"id":19448,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/posts\/8203\/revisions\/19448"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/media\/8210"}],"wp:attachment":[{"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/media?parent=8203"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/categories?post=8203"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/tags?post=8203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}