Doing business in Saudi Arabia: new opportunities surge under Saudi Vision 2030

Traditionally known for its massive oil reserves, KSA has been the world’s largest crude oil exporter and a central player in global energy markets. However, since the launch of Vision 2030 in 2016, KSA has undergone a remarkable transformation, leveraging its cultural heritage and strategic advantages to build a diversified, innovative economy. This ambitious plan has driven reforms that foster economic growth, create jobs, and attract global investment in sectors like renewable energy, tourism, entertainment, sports and other vital industries.

KSA’s Vision 2030 includes mega projects like NEOM, a $500 billion project to build a futuristic and sustainable city; Qiddiya, a world class entertainment centre in Riyadh province; the Red Sea Project, a sustainable luxury tourism destination with 50 hotels on the west coast; and Sports Boulevard, an urban park project stretching for 135 kilometers in Riyadh that is meant to encourage a healthy and sustainable lifestyle. These projects show KSA’s focus on innovation and sustainability, and on growing its economy in new ways, attracting investors worldwide.

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For reference to KSA laws and regulations, the National Center for Archives and Records (NCAR) regularly publishes these in both Arabic and English. NCAR is tasked with the management, preservation, and organisation of KSA’s historic documents and records.

Islamic culture and customs in KSA

The business environment in KSA is rapidly evolving, becoming more dynamic and inclusive, particularly with efforts to promote gender equality. Businesses aiming to operate in the Kingdom must adhere to and respect its Islamic culture and customs.

Hospitality

Hospitality is the basis of KSA’s culture, deeply rooted in Islamic and Arab traditions. Saudis are widely recognised for their generosity and warmth, often extending the same respect to strangers as they do to close friends and family. A common gesture of hospitality includes serving Saudi coffee alongside dates and sweets.

Conservative dress standards

KSA is a conservative country. However, recent reforms have introduced a more flexible approach to modest attire. Individuals are expected to respect Islamic traditions and KSA’s cultural values, particularly in public places, and adherence to the Public Decency Regulations is mandatory. These regulations reflect the Kingdom's commitment to preserving its Islamic values while embracing cultural diversity and modernisation.

Work week

In KSA, the typical work week runs from Sunday to Thursday. Fridays and Saturdays are considered the weekend, with Friday being a holy day for Muslims. This schedule is followed by both government and private sector employees. it is essential to keep this in mind when scheduling business meetings or coordinating with local partners in KSA.

Adjusted working hours during Ramadan

During the holy month of Ramadan, working hours are reduced to accommodate fasting individuals and ensure their well-being. Additionally, employees often enjoy public holidays after Ramadan, to celebrate the Islamic holiday of Eid Al Fitr. This underscores KSA’s emphasis on work-life balance during significant religious periods.

Common greetings

Greetings in KSA typically begin with "Assalam Alaykum”, meaning "Peace be upon you", and often followed by a handshake. One responds simply with “Wa Alaykum Assalam”. This simple yet profound exchange fosters a sense of mutual respect and connection.

Religious significance and pilgrimage

KSA is a central destination for Muslims worldwide, as it is home to the Two Holy Mosques located in Makkah and Al Madinah. Muslims perform Umrah throughout the year and Hajj during its designated period, with millions of pilgrims visiting annually. Entry to Al Haram, the sacred boundaries in Makkah, is restricted to Muslims only.

Mosques

As an Islamic country, KSA is home to countless mosques spread across its various provinces, reflecting the nation's deep-rooted religious and cultural identity. These mosques serve as a place of worship where Muslims perform their five daily prayers.

Visitors to KSA, including non-Muslims, are welcome to visit mosques and observe prayers, if they adhere to respectful guidelines, such as dressing modestly and maintaining the sanctity of the space. However, access to certain holy sites is restricted. Non-Muslims are not allowed to enter the Grand Mosque in Makkah, Islam's holiest site, which houses the Kaaba, nor the Prophet's Mosque in Al Madinah, another sacred location reserved for Muslims only.

KSA’s government framework

KSA’s government framework is known for its absolute monarchy system. The King of KSA serves as both the head of state and the head of government. The current King is Salman bin Abdulaziz Al Saud.

The King is supported by the Council of Ministers, also called the Cabinet. The Cabinet is the highest executive body and is responsible for implementing government policies and overseeing various governmental departments. The Cabinet consists of the prime minister, i.e. the Crown Prince; and 21 other ministers categorised based on their respective ministries and specific area of responsibility (eg Ministry of Commerce, Ministry of Investment) and several ministers of state for specific areas such as foreign affairs.

The most important government ministries in KSA include:

• the Ministry of Commerce (MOC), which is responsible for regulating and overseeing commercial facilities, facilitating the incorporation of companies and protecting consumer rights. It handles trade policies, licensing, and ensures business compliance with local laws. MOC additionally supports economic diversification and facilitates both domestic and international trade.
• the Ministry of Investment (MISA), which aims to attract and facilitate forging investments to diversify the economy and align with Vision 2030 and the National Investment Strategy. MISA also supports investors by offering services like licensing and simplifying business processes, it fosters growth in various sectors including technology, manufacturing and renewable energy.
• the Ministry of Municipalities and Housing, which oversees urban planning, infrastructure development and housing initiatives to enhance quality of life across KSA.
• the Ministry of Human Resources and Social Development (MHRSD), which is responsible for setting policies related to labor law and its implementing regulations for both public and private sectors. MHRSD also oversees social affairs and development programs aligned with KSA’s vision and government policies. MHRSD further focuses on empowering individuals, communities and institutions, promoting social responsibility and enhancing the labor market through policy and legislative improvements.

KSA's legal and regulatory framework

KSA’s legal framework has undergone significant reform in recent years to attract foreign investment and streamline business operations in line with Vision 2030. KSA’s legal system is rooted in Islamic Sharia law, but incorporates modern regulations to address commercial and corporate matters.

Sharia law, which is comprised of a collection of fundamental principles derived from a number of different sources, including the Holy Quran and the Sunnah (the witnessed sayings and actions of the Prophet Mohammed), forms the foundation of KSA’s legal system, particularly in areas like family law and personal disputes. For business and commerce, the government has implemented contemporary laws to align with international standards, ensuring a predictable and transparent legal environment.

The Private Sector Participation Law, issued in 2021, for example, regulates all procedures related to privatisation projects and encourages local and foreign private sectors to invest and actively participate in the national economy. The issuance of the Private Sector Participation Law signaled a major achievement as part of KSA’s Privatisation Program aimed at supporting the growth of the national economy and enhancing the private sector’s role. The Private Sector Participation Law established the rules and procedures for identifying government assets and services that can be privatised.

Next, the Civil Transactions Law (CTL)came into force in December 2023. The CTL contains 721 articles, covering matters including contract formation, execution and termination, acts causing harm – similar to tortious acts – as well as loss and damages and specific provisions tailored to various contract types, such as contracts of sale, leases, agency and construction contracts. These provisions are said to have made it easier for businesses to understand their rights and obligations under a contract and enhance the certainty of doing business in the Kingdom.

More recently, KSA has introduced a new Investment Law which repeals the previous Foreign Investment Law and has come into effect as of 7 February 2025. The Investment Law is designed to attract foreign investors by guaranteeing equal treatment for foreign and local investors. In doing so, the Investment Law provides for differing rights and protections for local and foreign investors such as the protection of intellectual property rights and trade secrets. It aims to facilitate investment, ownership and exit, as well as to support fairness, and equal opportunities in the market.

The Private Sector Participation Law, the CTL and the new Investment Law collectively contribute to the regulatory framework which will underpin the success of Vision 2030.

Other important new legislation for business activities and foreign investment include:

• The Companies Law, which became effective in January 2023 and is designed to facilitate the incorporation of businesses, promote transparency, encourage entrepreneurial initiatives, and attract investments;
• The new Anti-Corruption and Oversight Authority Law, which came into force in November 2024 and aims to ensure accountability for anyone who misuses public funds or violates regulations and laws, whether they are officials, employees, or government entities;
• The updated Tourism Law, which requires businesses such as hotel and tour operators to obtain licenses and permits from the Ministry of Tourism and establishes standards and systems to ensure quality, oversight, and the promotion of sustainability in the sector; and
• The Communications and Information Technology Law, which modernises KSA’s regulatory framework for the telecommunications and information technology sector and supports the growth of the digital economy.

Dispute resolution in KSA

Companies that are doing business or looking to do business in KSA need to have a good understanding of the dispute resolution mechanisms, whether through local courts, judicial committees, or arbitration.

KSA adopts a dual judiciary system, whereby there is the General Judiciary (“Sharia Courts”) and the Administrative Judiciary (“Administrative Courts” or the “Board of Grievances”). The General Judiciary consists of several types of courts, each with its own specialisation. These include the Supreme Court, Courts of Appeal, and First Instance Courts, which are further divided into General Courts, Criminal Courts, Personal Status Courts, Commercial Courts, and Labor Courts. Each court handles specific matters as outlined by the Law of Civil Procedure and the Criminal Procedures Law. The Administrative Courts, which are responsible for disputes in which a government entity is a party, have a hierarchy that mirrors that of the General Judiciary. It comprises of the Administrative Supreme Court, the Courts of Appeal, and the First Instance Court.

Judicial committees in KSA are specialised quasi-judicial bodies established to handle disputes or cases within their specific areas of jurisdiction, as outlined by KSA’s laws and regulations. These committees blend administrative and judicial functions and are typically formed to address specialised matters not handled by the general courts. The judicial committees include:

• Committees for Banking and Financial Disputes and Violations that address conflicts between banks, financial institutions and their respective clients in accordance with the relevant banking laws and regulations;
• General Secretariat of Zakat, Tax, and Customs Committees, which manage all matters related to taxation and zakat – an Islamic wealth tax – under the Zakat and Tax regulations;
• Real Estate Committees, which oversee property disputes, often under the Ministry of Justice; and
• Committees for Resolution of Securities Dispute, which deals with disputes in relation to the financial market violations under the Capital Market Law.

Arbitration in KSA is facilitated by key institutions such as the Saudi Center for Commercial Arbitration (SCCA), which provides arbitration and mediation services for commercial disputes adhering to international standards.

KSA is known as a pro-arbitration jurisdiction and a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). In March 2013, KSA introduced the Enforcement Law which governs the recognition and enforcement of arbitral awards. The Enforcement Law stipulated that enforcement judges shall decide on enforcement disputes regardless of their value.

In May 2023, the updated SCCA rules for commercial arbitration became effective. The new rules align with international best practice and emphasise the use of technology and empower tribunals to hold hearings remotely. A new SCCA court has also been established under the new regime to make key administrative decisions related to arbitral proceedings and appointments of tribunals. Recent court cases show that the KSA is continuing to adopt a pro-enforcement regime for arbitration awards.

Foreign investment

In KSA, the Ministry of Investment oversees foreign investments and facilitates business establishment through laws, regulations, and manuals. Vision 2030 has opened previously restricted sectors, such as real estate and entertainment, to foreign investors. International project developers and investors, for example, can expect significant opportunities in KSA’s water sector, as the government has set key water-related objectives with a focus on promoting private sector participation.

Additionally, many sectors now allow 100% foreign ownership, eliminating the need for local partners. Businesses in the tourism, hospitality and entertainment sectors are among those that can be fully foreign-owned.

Foreign businesses can establish operations through various structures, including limited liability companies, joint ventures, and branch offices. The ideal structure varies based on the nature of the business, the scale of investment, and the organization’s long-term objectives.

KSA implemented a 15% value added tax (VAT) in 2020. Corporate tax rates for foreign-owned entities stand at 20%, while Saudi-owned businesses are subject to zakat, an Islamic wealth tax.

Ways of conducting business in KSA

KSA offers a range of options for foreign investors looking to establish a presence. These options are tailored to meet specific business needs and align with operational objectives, while also adhering to the Kingdom’s laws and regulations. The main options for foreign investors to conduct business in KSA include direct investment, establishing a branch, forming a joint venture with a Saudi shareholder, engaging local agents or distributors, and operating in special economic zones.

KSA also provides various ways that foreign investors, executives and workers are allowed to live and work in the kingdom. Apart from the usual business visa and work visa route, investors and skilled professionals, entrepreneurs can apply for premium residency, known as Saudi ‘Green Card’, without needing a local sponsor.

Direct investment

Foreign investors can directly invest in KSA by establishing a Saudi entity. This approach involves choosing from several types of legal structures, each offering unique advantages depending on the nature and scale of the business.

A limited liability company is a popular choice for many investors due to its flexibility and limited liability protection. While a general partnership company is suitable for partnerships where all partners share liabilities and profits, the joint stock company structure is ideal for larger businesses, particularly those looking to raise capital through the public market. The simplified joint stock company model is designed for businesses seeking the benefits of a joint stock company but with a simplified setup process.

These options allow foreign investors to align their investments with local regulatory requirements and achieve their business objectives.

Establishing a branch

Setting up a branch allows foreign companies to operate directly in the KSA market without forming a separate legal entity. This approach is suitable for businesses that require direct control over their operations in KSA and wish to benefit from a straightforward operational structure.

Joint venture with a Saudi shareholder

Collaborating with a Saudi partner to establish a joint venture is a common route for foreign investors, particularly in sectors where such partnerships are mandated. For more on this, see our detailed analysis on joint ventures in KSA.

Engaging local agents or distributors

For businesses that do not require a physical presence in KSA, appointing a local agent or distributor through commercial agencies is a practical solution.

Operating in Special Economic Zones

KSA has created Special Economic Zones (SEZs) to encourage foreign investment and foster economic variety. These zones provide a range of incentives, such as offering preferential tax treatments to encourage investment, allowing full foreign ownership, and simplified customs processes to facilitate international trade.  To regulate the rising number of SEZs in KSA, the Economic Cities and Special Zones Authority (ECZA), formed in 2010, is the enabler and the umbrella regulator of both economic cities and special zones operating in KSA. ECZA also has a supervisory role with regards to SEZs and economic cities both administratively and financially.

These zones are particularly well-suited for industries such as logistics, technology, and manufacturing. The Ras Al-Khair SEZ located in the Eastern province, for example, focuses on the marine industries, logistics and shipbuilding, while the King Abdullah Economic City in Mecca province supports advanced manufacturing and logistics. The Cloud Computing SEZ in Riyadh primarily targets investments in information technology and cloud computing, and the Jazan SEZ on the crucial Red Sea shipping route acts as a trade gateway to Africa and Asia, with a focus on industrial and food processing activities.

By offering these diverse approaches, KSA allows foreign investors to choose the most suitable model and location for their business objectives, making KSA an appealing destination for global enterprises looking to establish or expand their presence in the Middle East.

Co-written by Hamza Akhai and Abdulrahman Alangari of Pinsent Masons.