Investors looking to exploit Saudi Arabia’s thriving industrial sector can leverage its strategic geographic location, solid infrastructure, and tax exemptions. However, navigating the regulatory framework is essential for success. In this guide blog, Business Link’s experts will walk you through issuing an industrial license in Saudi Arabia. The industrial license process involves several steps and public relations officer services. Continue reading to find out more.
The Regulations of Industrial License in Saudi Arabia
To start industrial projects in Saudi Arabia, investors must apply through the portal of the Ministry of Industry and Mineral Resources (MIMR). Foreign investors must register their business with MISA. This involves submitting a detailed business plan and demonstrating financial feasibility. While having a local partner can be beneficial, it’s not mandatory for all sectors. The investor should state the product and production capacity, the estimated capital, and the proposed location. If the ministry considers the project appropriate, it will provide the applicant with a license application form.
The license to establish an industrial company in Saudi Arabia is issued following one of the following two regulations:
• The National Industrial Development Program applies to industrial projects established by Saudi citizens with full Saudi capital.
• The Foreign Investment Law applies to industrial projects wholly owned by foreign capital or in joint ventures with foreign capital.
Rules for Industrial License
Projects with a fixed capital of less than SAR 1 million do not apply to the industry license system. Investors should obtain registration forms from the Ministry’s Industrial Project Evaluation and Licensing Department. Investors must submit the form and the equipment invoice to the US Department of Commerce. When the department approves the registration, it will contact the business registration office. Wherever the project is located, notify the investor to contact the registration department to complete the process. Commercial registration of bakeries, cold storage, ice plants, and cement mixing projects can be carried out without obtaining an industrial license from the Ministry.
Tax Exemption in the Saudi Industrial Sector:
On May 17, 2024, the Kingdom of Saudi Arabia’s Cabinet approved the revised regulations exempting various industrial inputs from taxes and duties. These exemptions encompass machinery, equipment, spare parts, primary raw materials, semi-manufactured materials, and packaging materials essential for industrial production.
This regulation aims to bolster the competitiveness of KSA-manufactured products in global markets. Alleviating the burden of duties, decreasing production costs, and enabling Saudi companies to reduce their prices or reinvest the savings into enhancing product quality and marketing strategies. This will enable Saudi products to compete more effectively with foreign goods that are subject to customs duties, thereby increasing their appeal to consumers and investors.
The Saudi Cabinet has approved the updated regulations for exempting industrial inputs from taxes, including:
- Machinery.
- Equipment.
- Spare parts.
- Semi-processed materials.
- Raw & packaging materials.
To obtain these benefits, industrial companies must meet the following conditions:
- Provide all the information and detailed information about the industrial project required by the Ministry and allow representatives of the Ministry to inspect the project under the provisions of the Act.
- Only use the equipment, machinery, spare parts, and raw materials exempted from tariffs in licensed factories and use them to obtain the exemption.
- The staff should be Saudi unless otherwise approved by the Ministry of Labor and Social Affairs.
Industrial License Application Process
The application should include the applicant’s legal status, information about the company, and the products. It plans to produce in the Kingdom information about the local competition. Description of the manufacturing process, detailed information about equipment, machinery, and raw materials, manpower requirements, and plans for Saudi labor and personnel training, Project value, economic feasibility study, project cost, and marketing plan.
The functions of the Foreign Investment Committee include recommending development projects, evaluating investment applications, investigating complaints or disputes, recommending penalties for violators, and formulating rules for bill implementation.
SAGIA|MISA emphasizes the importance of foreign companies conducting business under the correct licensing activities. The service provides all industrial licenses in Saudi Arabia, like heavy and light industries and transition industries.
Documents for Industrial License Saudi Arabia
- Commercial registration copy certified by the Saudi Embassy. If one of the partners is a natural person with the nationality of one of the GCC countries, provide the ID.
- The parent company’s financial statements in the previous fiscal year.
- If one of the partners implied previous permission from the Ministry of Investment, when filling in the partner information when submitting the online application, it must be stated.
- Holders of high-end residences are exempt from those requirements.
- The applicant must enter data on Saudi national status, premium residence, or residence.
- The license must be reissued at the Ministry of Industry and Mineral Resources to obtain an industry license. Obtain environmental approval together with the General Administration of Meteorology and Environmental Protection.
Emark your investment journey in Saudi Arabia
Need further assistance with your industrial license in Saudi Arabia?
Business Link can assist you in obtaining an industrial license. Our team of specialists will assist you in setting up your business from the ground up. Contact us if you require any additional assistance with Business Setup in Saudi Arabia.
