EVERYTHING YOU NEED TO KNOW ABOUT ESTABLISHING A BRANCH OFFICE FOR US FIRM IN SAUDI ARABIA
Table of Contents
- 1. WHAT ARE THE ANNUAL ACCOUNTS FILING REQUIREMENTS FOR A US BRANCH OFFICE IN SAUDI ARABIA?
- 2. WHAT ARE THE APPLICABLE LEGISLATIONS FOR US BRANCH OFFICES IN SAUDI ARABIA?
- 3. CAN A US CITIZEN OPEN A BANK ACCOUNT IN SAUDI ARABIA?
- 4. WHAT IS THE CORPORATE TAX RATE IN SAUDI ARABIA?
- 5. WHAT ARE THE DOCUMENTS REQUIRED TO BE FILED BY THE AMERICAN PARENT COMPANY FOR ITS BRANCH OFFICE IN KSA?
- 6. DOES UNITED STATES HAVE DOUBLE TAX TREATY AGREEMENT WITH SAUDI ARABIA?
- 7. HOW MUCH DOES IT COST TO SETUP A BRANCH OR LIMITED LIABILITY COMPANY LICENSE IN SAUDI ARABIA?
- 8. HOW TO ESTABLISH A BRANCH OFFICE OF MY US FIRM IN SAUDI ARABIA?
- 9. WHAT ARE THE BENEFITS OF COMPANY INCORPORATION IN SAUDI ARABIA?
- 10. TAXATION OF A US BRANCH OFFICES IN SAUDI ARABIA
- 11. WHAT IS THE DIFFERENCE BETWEEN BRANCH & SUBSIDIARY IN SAUDI ARABIA?
- 12. WHAT IS THE DIFFERENCE BETWEEN A WORK VISA & BUSINESS VISA IN SAUDI ARABIA?
WHAT ARE THE ANNUAL ACCOUNTS FILING REQUIREMENTS FOR A US BRANCH OFFICE IN SAUDI ARABIA?
The procedures for filing yearly accounts for a United States branch office in Saudi Arabia might vary based on local rules and the structure of the company. However, the branch office is likely to be subject to the following regulations in general:
- Annual financial statements may be required of the branch office. These statements should present a complete overview of the branch’s financial performance, including income, expenditure, assets, and liabilities.
- The branch office’s financial statements are reviewed by an independent auditor.
- In Saudi Arabia, the audited or unaudited financial statements, together with other required documentation, may be required to be reported to the applicable local authorities or regulatory organisations.
- Financial statements and associated documents may need to be translated into Arabic and presented in Saudi Riyal (the local currency).
- Tax reporting requirements for the branch office may include the filing of tax returns and associated financial information to Saudi Arabian tax authorities.
WHAT ARE THE APPLICABLE LEGISLATIONS FOR US BRANCH OFFICES IN SAUDI ARABIA?
The following are the legal requirements to register a US branch in Saudi Arabia:
- It is mandatory that the foreign company has existed for 3+ years.
- The paid-up capital must be the same as a subsidiary.
- The paid-up capital must be deposited into a local Saudi corporate bank account for the branch.
- The parent company adopts full liability for the Saudi branch.
CAN A US CITIZEN OPEN A BANK ACCOUNT IN SAUDI ARABIA?
Saudi Arabia is home to more than 30 local and international banks. US citizens can choose from a wide range of options when opening a bank account in Saudi Arabia. Among other documents, a newly established Saudi Arabian company will have to provide:
- Copy of General Manager Iqama.
- Copy of MISA license.
- Company Commercial Registration Certificate.
- Passport copies of the shareholders or statute documents in case the shareholder is a legal entity.
- Company Memorandum and Articles of Association (MOA/AOA).
- Board Resolution and Power of Attorney (POA) empowering a company officer to open a bank account.
- ID copies for shareholders and authorised signatories.
- ZATCA Certificate.
- National Address.
- Company’s seal.
WHAT IS THE CORPORATE TAX RATE IN SAUDI ARABIA?
The Corporate Income Tax rate is 20% of the net adjusted profits, and the Zakat is charged on the Zakat base at 2.5%. However, the two following activities are charged a different corporate tax rate:
- Income from oil and hydrocarbon production is subject to a tax rate in the range of 50% to 85%.
- The tax base of a person working in natural gas investment is independent of the tax base related to the other activities performed by this person.
WHAT ARE THE DOCUMENTS REQUIRED TO BE FILED BY THE AMERICAN PARENT COMPANY FOR ITS BRANCH OFFICE IN KSA?
If you are planning to set up a branch or subsidiary in Saudi Arabia, the following are the documents you will need to make sure they are translated and attested by the Ministry of Foreign Affairs and the Saudi Embassy:
- Copies of the commercial registration/license.
- Parent company Memorandums and Articles of Association.
- Share Certificate.
- Shareholder Resolution/Board Resolution.
- Power of Attorney (POA).
- A drafted document detailing the decision to appoint the Saudi branch general manager.
- Audited financial statements to display profit.
- 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.
DOES UNITED STATES HAVE DOUBLE TAX TREATY AGREEMENT WITH SAUDI ARABIA?
The United States and Saudi Arabia do not have a Double Taxation Treaty (DTT) or Double Tax Agreement (DTA) in place.
HOW MUCH DOES IT COST TO SETUP A BRANCH OR LIMITED LIABILITY COMPANY LICENSE IN SAUDI ARABIA?
The cost to setup a Limited Liability Company in Saudi Arabia may vary depending on the different company setup packages, license types, legal structure, ownership types and business facilities. For more details on the cost for your Saudi Arabia company setup, contact Creation Business Consultants on email [email protected] or call Saudi Arabia at +966 56 865 2329 UAE +971 4 878 6240.
HOW TO ESTABLISH A BRANCH OFFICE OF MY US FIRM IN SAUDI ARABIA?
Incorporating a Saudi branch is initiated with the Ministry of Investment in Saudi Arabia (MISA). The Ministry of Commerce and Industry issues the Commercial Registration for the branch. Below are the requirements to setup a Saudi company as a US citizen:
- Your company must be operational for over 1 year, showcasing your experience and credibility.
- The last year’s audited financial report that proves your financial strength and reliability.
Make sure to stay informed and comply with all necessary regulations for smooth company procedures in Saudi Arabia.
WHAT ARE THE BENEFITS OF COMPANY INCORPORATION IN SAUDI ARABIA?
Saudi Arabia has been actively working to attract US investments through a combination of economic reforms, policy changes, and strategic initiatives. Here are some reasons why Saudi Arabia has been considered attractive for US investments:
- Saudi Arabia has been implementing an ambitious economic diversification plan called Vision 2030. This plan aims to reduce the country’s dependency on oil revenue and expand into various sectors such as tourism, entertainment, technology, healthcare, and renewable energy.
- The country’s well-developed infrastructure, including modern transportation and logistics networks, enhances its appeal as a regional business centre.
- With a population of over 30 million people, Saudi Arabia offers a substantial consumer market. As the largest economy in the Gulf Cooperation Council (GCC), it presents opportunities for businesses to tap into a growing middle class and increasing consumer demand.
- The Saudi government has introduced various initiatives to attract US investment.
- The country is investing heavily in infrastructure development, including building smart cities, improving transportation networks, and expanding industrial zones.
- Saudi Arabia has developed its capital markets, with the Saudi Stock Exchange (Tadawul) being the largest in the region. US investors have been allowed to directly invest in the stock market, increasing liquidity and opportunities for investment.
TAXATION OF US BRANCH OFFICES IN SAUDI ARABIA
The following are the principal taxes that a Saudi branch office must pay:
- The Corporate Tax is levied at a rate of 20% for most enterprises (exceptions apply to oil and gas industries).
- The Value Added Tax is imposed at a standard rate of 5%.
- The Capital Gains Tax is collected at a rate of 20%.
By adhering to these legal requirements, you ensure a smooth and compliant company formation process in Saudi Arabia.
WHAT IS THE DIFFERENCE BETWEEN BRANCH & SUBSIDIARY IN SAUDI ARABIA?
In Saudi Arabia, as in many other countries, there are key differences between a branch and a subsidiary when it comes to setting up a business. The choice between a branch and a subsidiary in Saudi Arabia depends on various factors, including the nature of the business, liability concerns, and tax considerations. It’s advisable to seek legal and financial advice to determine which option is most suitable for a specific business venture. Check our page for all types of business licenses in Saudi Arabia.
WHAT IS THE DIFFERENCE BETWEEN A WORK VISA & BUSINESS VISA IN SAUDI ARABIA?
A work visa in Saudi Arabia is intended for those who are employed by a specific sponsor and require the acquisition of a residency permit. A business visa, on the other hand, is for short-term business activity and does not imply direct employment. Work visas must be accompanied by a job offer, but business visas must be sponsored by a Saudi firm or organisation. Both have unique goals, durations, and qualifying requirements.