Kingdom of Saudi Arabia

Fact Sheet

Saudi Arabia offers a dynamic and attractive environment for foreign companies seeking to invest and expand their operations in the Middle East. As a country undergoing significant economic transformation through its Vision 2030 program, Saudi Arabia presents a wealth of opportunities across various sectors, from energy and manufacturing to technology and entertainment. To facilitate this investment journey, the Investment Manual for Foreign Companies in Saudi Arabia serves as a comprehensive guide. This manual provides valuable insights into the Kingdom's regulatory framework, investment incentives, key sectors, and practical considerations, ensuring that foreign investors can navigate the Saudi market with confidence. Whether you are a well-established multinational corporation or a startup looking for growth prospects, this manual is your gateway to understanding the vast potential and the mechanisms for success within the Saudi Arabian business landscape.


Economic Structure:

  • According to the International Monetary Fund data and local statistical sources of the country, Saudi Arabia ranked 18th among the world's largest economies, with the Saudi economy accounting for approximately 1% of the global GDP, or 833.5 billion dollar. Additionally, Saudi Arabia stands as the largest economy in the Arab world and the Middle East region, and it is the only country in the G20 from the region.

    The Kingdom, which possesses around 16% of the world's oil reserves, plays a significant role in OPEC and is one of the largest producers and exporters of crude oil and natural gas globally. According to Forbes magazine, petroleum represents approximately 87% of the budget revenues, 42% of the total GDP, and 90% of export revenues.

    Efforts are underway to diversify the economy through the Vision 2030 reform program.

Vision 2030:

  • In 2016, the Saudi Government unveiled its Vision 2030, outlining its ambitions to modernize the nation and position Saudi Arabia as a major investment hub. The primary objective is to reduce the country's reliance on oil and foster economic diversification, with the goal of raising non-oil revenue to $160 billion by 2020 and $267 billion by 2030. The ongoing economic reforms are designed to enhance the attractiveness of foreign investments and are integral to the Saudi Vision 2030 strategy. Notably, the first quarter of 2019 saw a rapid surge in foreign investment, marking a substantial 28 percent increase.

Public Investment Fund (PIF):

  • The PIF is a key driver of economic transformation, with investments in tech companies, infrastructure, and renewable energy projects.

Average Monthly Consumer Spending

  • Approximately 100 Billion Saudi Riyal

% of Private Sector Contribution to GDP

  • Approximately 43%

Saudization:

  • Due to the increasing unemployment rate among the Saudi population, the Saudi government decided to establish the “Saudization program “ as one of the essential elements of its domestic policies.

    The main goal of this program is to increase the participation of Saudi citizens in the private sector and decrease the reliance on foreign workers. As a result, recruitment of foreign employees is permissible only if there is no equally qualified Saudi candidate for the position.

  • In accordance with these policies, businesses operating in Saudi Arabia are obligated to allocate a specific portion of their workforce to Saudi citizens, ensuring a certain percentage of their employees are of Saudi nationality. As a consequence of Saudization, in 2019, 10,000 Saudi nationals were officially listed as employees covered by Social Insurance. Back in 2011, the then Minister of Labor took the decision to implement the Nitaqat-System, which governs the Saudi nationalization program.

  • The share of Saudi citizens in the public sector (which accounts for more than half of the state's budget) is estimated at around 90%, with women comprising one-third of them. In contrast, foreign labor constitutes the majority in the private sector, accounting for over 80%.

Taxation:

  • Saudi citizens and Saudi companies do not pay any income tax; the responsibility lies solely on Zakat, an Islamic wealth tax, which amounts to 2.5% of net wealth annually. Non-Saudi companies, on the other hand, are subject to a corporate tax, with a maximum rate of 20% (except for the hydrocarbon sector, where a progressive tax on profits is imposed, ranging from 30% to 85%).

Value Added Tax (VAT):

  • 15%