{"id":8614,"date":"2022-08-09T15:11:59","date_gmt":"2022-08-09T15:11:59","guid":{"rendered":"https:\/\/www.creationbc.com\/?p=8614"},"modified":"2024-09-11T08:30:48","modified_gmt":"2024-09-11T08:30:48","slug":"setting-up-a-business-in-saudi-arabia-verses-setting-up-a-business-in-the-uae","status":"publish","type":"post","link":"https:\/\/www.creationbc.com\/en-sa\/news\/setting-up-a-business-in-saudi-arabia-verses-setting-up-a-business-in-the-uae\/","title":{"rendered":"THE RIVALRY CONTINUES \u2013 SETTING UP A BUSINESS IN SAUDI ARABIA VERSES SETTING UP A BUSINESS IN THE UAE"},"content":{"rendered":"<p>[vc_row][vc_column][vc_column_text]<span style=\"font-weight: 400;\">Saudi Arabia and the UAE are making a lot of noise amongst the headlines battling for the top spot as the leading business hub for the region. Both countries are sound options for those considering <a href=\"\/en-sa\/company-formation-saudi-arabia\/\">expanding their business and setting up a company<\/a>, below we take a closer look.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span style=\"color: #029c7e;\">WHY ARE COMPANIES INVESTING &amp; SETTING UP IN SAUDI ARABIA &amp; THE UAE?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The competitive tension between the UAE and KSA is ratcheting up as Saudi Arabia, driven by the need to diversify its oil-based economy has made further moves to become the regions first choice for foreign investment.\u00a0 A move that is in line with its vision 2030, to use its strategic location and economic power to connect the three continents of Africa, Asia, and Europe. With forty percent of Saudi Arabia\u2019s population under the age of 24, economic policy implemented now will significantly impact the Kingdom and expand the opportunities for young Saudi\u2019s. The UAE\u2019s own vision for the future, \u2018Vision 2040\u2019 focusses on developing the social infrastructure and rehabilitating older locales whilst moving to a more knowledge-based economy.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span style=\"color: #029c7e;\">TRADING RELATIONS BETWEEN SAUDI ARABIA &amp; UAE<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The UAE is Saudi Arabia\u2019s second largest trading partner with approximately USD $15 billion in exports to the Kingdom annually.\u00a0\u00a0<\/span><\/p>\n<p><strong>UAE and Dubai free zones are and remain an attractive option for the regions largely ex-pat manufacturers as they offer:<\/strong><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lower red tape and documentation requirements to set up a company;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">100% foreign ownership; and\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">0% personal and corporation tax.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The recent move by Saudi Ministry of Finance to no longer recognise products manufactured in UAE free zones as being of \u2018GCC origin\u2019 is another shot across the bows for the UAE and has removed import duty exemption overnight to manufacturers exporting to Saudi.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Those manufacturers operating in UAE mainland areas, where the percentage of the local workforce is less than 25%, the same preferential tariffs will also disappear.\u00a0 This has prompted many manufacturers to consider moving their entire operations and set up a company in Saudi Arabia or lose a lucrative market to local competitors.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">UAE free zone trading companies are perhaps hardest hit being faced with the choice of increased duties on exports to Saudi Arabia or set up a trading licence in Saudi Arabia that comes with a 30M SAR paid up share capital requirement.\u00a0 Trading as an SME in the Kingdom is clearly a space reserved for Saudi\u2019s current and future entrepreneurs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Saudi Arabia has also recently indicated that public-sector contracts will not be awarded to companies whose main hub is elsewhere in the region.\u00a0 Anecdotally, companies with existing trading\/commercial relationships are being \u2018encouraged\u2019 to at least have a local licence, for now.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Looking at these policies in combination, the carrot of business opportunity in the region\u2019s largest economy is judiciously mixed with some fiscal stick to encourage a change in international investment flows.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span style=\"color: #029c7e;\">KEY DIFFERENCES &#8211; REGISTERING A BUSINESS IN SAUDI ARABIA &amp; THE UAE\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Those businesses considering a move and to set up an entity in Saudi Arabia, are to be fully prepared and to plan well in advance as the licence set up process is different to the UAE.\u00a0 The Saudi government inward investment infrastructure is still modernising, and whilst developing apace, often requires knowledgeable handling to navigate correctly and deliver robust licensing set up solutions.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"color: #000000;\">LOCAL PARTICIPATION\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">In the UAE, certain business activities may require local sponsorship or a local service agent when setting up a company.\u00a0 In Saudi Arabia, depending on the business activity, an entity may be either one hundred percent foreign owned, or require mandatory participation of a Saudi national ranging between twenty percent to one hundred percent.\u00a0\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"color: #000000;\">REGISTERING A TRADING COMPANY IN SAUDI ARABIA &amp; THE UAE<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">One hundred percent foreign owned trading companies has a Saudi Riyal -SAR 30 million paid up share capital requirement.\u00a0 The amount of paid-up capital can be reduced equivalent to the level of ownership by a local.\u00a0 However, this percentage ownership by a local must be genuine or executive members of the company in question could face fines of up to SAR 5 million and even imprisonment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Conversely, in the UAE there are no paid-up capital requirements for registering and setting up a mainland trading company. Certain trading business activities are now permitted to be one hundred percent foreign owned, yet this is to be defined by the relevant Emirate and licensing authority.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"color: #000000;\">REGISTERING A PROFESSIONAL LICENSE COMPANY IN SAUDI ARABIA &amp; THE UAE<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">When setting up a professional licence type in Saudi Arabia e.g., architecture business activities, there is a mandatory twenty-five percent Saudi participation required as an actual business partner within the company.\u00a0 In these instances, the percentage shareholding directly confers an equivalent share of profits and board representation.\u00a0 Interestingly, outside such specialist business activity areas, there is no requirement for Saudi participation when setting up and forming most professional licenced companies in Saudi Arabia.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Most professional licensed business activities in Dubai and the UAE already permit one hundred percent foreign ownership. However, UAE professional licenses still have the requirement for a local service agent and ordinarily there is no paid-up capital requirement.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"color: #000000;\">REGISTERING AN INDUSTRIAL LICENSE COMPANY IN SAUDI ARABIA &amp; THE UAE<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Industrial licences do not require either a minimum paid up share capital figure, or Saudi participation apart from certain reserved\/strategic activities.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Gaining any commercial registration licence requires many approvals from government authorities that often need to be managed individually.\u00a0 This can be time-consuming and complex; a key reason why a corporate service provider must have a physical presence on the ground in Saudi to expedite business set up solutions in line with your timescales.\u00a0 Normal setup times for setting up a company and commercial registration with licence issuance is circa three months but attempting to manage this remotely can mean timescales up to six months plus. Expanding international businesses will also need to take account of the local Saudi tax environment to take full advantage of the opportunities within the Kingdom.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whereas, when forming an industrial license in the UAE, local participation on the business license is not ordinarily required nowadays. Most industrial business activities may require paid-up capital requirements which will vary and will be specified at the time of business registration.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"color: #000000;\">JOB CREATION<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">With the drive to increase career opportunities for the Kingdom subjects, Saudisation is a requirement for any business in the Kingdom and is based on a one Saudi national worker per every three foreign workers.\u00a0 Manufacturing companies looking to enter the Saudi market have a range of labour suppliers on hand to meet their need.\u00a0 Covid travel restrictions have temporarily reduced labour supply, and therefore increased cost of solutions, but with the re-opening of borders, one would expect this to improve.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For most SME\u2019s, there is no mandatory requirement for foreign companies to employ local Emiratis. Yet, Emiratisation is also at the forefront of the UAE\u2019s government to increase job creation for nationals. The UAE has rolled out this initiative to employ its citizens in an efficient manner in the public and private sectors.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span style=\"color: #029c7e;\">TAKEAWAY<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The right advice from a knowledgeable, experienced and hands on team is vital with any investment consideration.\u00a0 With the scale of opportunities in Saudi Arabia and the UAE on offer for those with the means to take advantage of them, setting up a company correctly means those opportunities can be grasped with both hands. For a free no commitment consultation with our expert corporate structuring team email <\/span><strong><a href=\"mailto:info@creationbc.com\">info@creationbc.com<\/a><\/strong><span style=\"font-weight: 400;\"> or call <a href=\"tel:+966545112494\" target=\"_blank\" rel=\"noopener\">+966 54 511 2494<\/a><\/span>[\/vc_column_text][vc_empty_space][\/vc_column][\/vc_row][vc_row][vc_column width=&#8221;1\/6&#8243;][vc_single_image image=&#8221;6596&#8243; alignment=&#8221;center&#8221; style=&#8221;vc_box_circle_2&#8243;][\/vc_column][vc_column width=&#8221;1\/6&#8243;][vc_column_text]<strong>Carolyn Cairns, <\/strong><br \/>\n<strong>Commercial Director<\/strong><\/p>\n<p><a href=\"https:\/\/www.linkedin.com\/in\/carolyn-cairns-824253a5\/\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-6611\" src=\"https:\/\/www.creationbc.com\/wp-content\/uploads\/2019\/11\/download.png\" alt=\"\" width=\"37\" height=\"37\" title=\"\" srcset=\"https:\/\/www.creationbc.com\/wp-content\/uploads\/2019\/11\/download.png 225w, https:\/\/www.creationbc.com\/wp-content\/uploads\/2019\/11\/download-150x150.png 150w, https:\/\/www.creationbc.com\/wp-content\/uploads\/2019\/11\/download-80x80.png 80w\" sizes=\"auto, (max-width: 37px) 100vw, 37px\" \/><\/a>[\/vc_column_text][\/vc_column][vc_column width=&#8221;1\/6&#8243;][\/vc_column][vc_column width=&#8221;1\/6&#8243;][\/vc_column][vc_column width=&#8221;1\/6&#8243;][\/vc_column][vc_column width=&#8221;1\/6&#8243;][\/vc_column][\/vc_row][vc_row][vc_column][vc_empty_space][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_column_text]Saudi Arabia and the UAE are making a lot of noise amongst the headlines battling for the top spot as the leading business hub for the region. Both countries are sound options for those considering expanding their business and setting up a company, below we take a closer look. &nbsp; WHY ARE COMPANIES INVESTING &amp; [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":7211,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[98,100],"tags":[],"class_list":["post-8614","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\/8614","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=8614"}],"version-history":[{"count":7,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/posts\/8614\/revisions"}],"predecessor-version":[{"id":19447,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/posts\/8614\/revisions\/19447"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/media\/7211"}],"wp:attachment":[{"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/media?parent=8614"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/categories?post=8614"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.creationbc.com\/en-sa\/wp-json\/wp\/v2\/tags?post=8614"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}