Cost of Starting a Company in Saudi Arabia
Understanding the detailed cost structure associated with your Saudi expansion is critical to budgeting effectively, avoiding unexpected expenses, and achieving a smooth soft landing.
Cost of Starting a Foreign Business in Saudi Arabia
On average, the cost of setting up a business in Saudi Arabia can reach SAR 550,000 ($146,700) for the first year of expansion. This accounts for incorporation, hiring, workspace, compliance, and third-party services.
Breakdown of Expansion Costs for the First Year
Incorporation
Incorporation costs can average $40,000 (SR 150,000), covering company registration, licensing, and all documentation required to legally establish your Saudi entity.
Hiring
Total hiring costs associated with hiring a general manager and local employees can amount to $100,000 (SR 375,000). This covers the monthly salaries of a general manager (SR 20,000–25,000) and Saudi national employees (SR 5,000–8,000, with some salaries reaching SR 12,000). Hiring Saudi nationals to meet the Saudization (Nitaqat) quota is mandatory within 6 to 12 months after incorporation.
Workspace (Offices)
Shared office can cost $5,333 (SR 20,000).
Compliance and Renewals
Total costs for the renewal of business licenses and updating company records across relevant government portals can reach $20,000 (SR 75,000). This stipulation encompasses the license renewal processes that start in the 11th month of the year.
Third-Party Services
Expenses for hiring third-party services for critical business functions, such as payroll management, accounting, auditing, and Public Relations Officer (PRO), can typically reach $6,667 (SR 25,000).
Additional Costs to Consider
Taxation
Value-Added Tax (VAT): Currently at 15%.
Corporate Income Tax: Levied on net adjusted profit or the share of companies owned by non-Saudis at a standard rate of 20%.
Withholding Taxes: Range from 5% to 20%, depending on the type of business activity.
Employee Salaries
15-30% of the employer’s base salary.
Avoid Common Mistakes When Budgeting for Your Saudi Expansion
Here are the top mistakes to avoid when setting up a business in Saudi Arabia. The consequences of these mistakes can significantly increase costs.
Incomplete licensing procedures
Hinders operations and leads to incresed costs.
Delaying business license and general manager’s Iqama renewals
risks extra fees and non-compliance issues.
Non-compliance with Saudization quotas
can lead to penalties, inflating your operational costs.
AstroLabs Advantage
| Offering | AstroLabs | Corporate Services Companies offering PRO & GRO | Law Firms | In-House |
|---|---|---|---|---|
| 40+ on-ground local team of experts |  |  | | |
| Government portal management and compliance support | | | | |
| Full management of your company licenses and certificates | | | | |
| Management of registered employees across the employee journey, from hiring to ongoing management | | | | |
| Full suite of support: PRO, GRO, HRs support and access to a pool of Saudi talent | | | | |
| National Address Registration with varied coworking and private office locations | | | | |
| Seamlessly manage GRO services online using a digital platform | | | | |
| Corporate bank account opening | | | | |
| Access to a community of 700+ high-growth businesses in Saudi Arabia | | | | |
| Extended media and exposure support through press releases, social media coverage and articles | | | | |
| Opportunity-matchmaking with potential partners in governmental entities and corporates | | | | |
| Access to global and regional events such as BIBAN, LEAP, Seamless, etc | | | | |