Setting up in Saudi Arabia from India: the 2025 Investment Law, commercial registration and tax
Saudi Arabia replaced its foreign investment licence with investor registration in 2025 and changed how commercial registrations work. What an Indian investor now does, step by step.
Saudi Arabia is the largest economy in the Gulf and a major market for Indian contractors, distributors and service firms. Two reforms changed the entry process in 2025, so older guides are now out of date.
Step 1 — register as an investor
The Investment Law (Royal Decree No. M/19) came into force in February 2025 and repealed the 2000 Foreign Investment Law. Instead of applying for a foreign investment licence, an investor now registers with the Ministry of Investment (MISA) in the National Investor Register before investing, and keeps the registration updated. Foreign investors may generally own 100% of a Saudi company, but activities on the list of excluded activities need prior approval, and some activities carry minimum capital requirements — so the activity is screened first.
Step 2 — form the company and obtain the CR
Under the Companies Law in force since 19 January 2023, a limited liability company can be formed by a single shareholder. The company then obtains its commercial registration (CR). Under the Commercial Register Law effective 3 April 2025, a CR no longer expires and does not need renewing, but it must be confirmed every year; if it is not confirmed within three months of the due date, the CR is suspended automatically, and it can be cancelled if it is still not confirmed a year later.
Step 3 — understand tax, Zakat and VAT
| Corporate income tax | 20% on the share of profits attributable to non-Saudi, non-GCC owners |
| Zakat | 2.5% of the Zakat base attributable to Saudi and GCC owners |
| Withholding tax on dividends | 5% on dividends paid to non-residents (the India–Saudi treaty rate on dividends is also 5%) |
| VAT | 15%; registration is mandatory above SAR 375,000 and voluntary above SAR 187,500 |
| E-invoicing | ZATCA's FATOORA rules apply to VAT-registered businesses, with integration phased in by waves |
A company wholly owned by an Indian investor therefore pays corporate income tax rather than Zakat. India and Saudi Arabia have had a double taxation avoidance agreement since 2006; it can reduce Saudi withholding on some payments such as royalties, and gives the framework for foreign tax credit in India.
Step 4 — plan your workforce and government work
Private-sector employers must meet Saudization quotas under the Nitaqat programme, which affects how many expatriate visas you can obtain. If you intend to bid for government contracts, note that since 1 January 2024 government entities have generally been restricted from contracting with foreign companies whose regional headquarters is outside the Kingdom, subject to an exemption mechanism. The Regional Headquarters (RHQ) programme carries a 0% corporate income tax incentive on qualifying RHQ income for 30 years.
Step 5 — the Indian side
For a resident individual, a Saudi company is an overseas direct investment: it must be an operating business that meets the ODI conditions, Form FC is filed through your bank, and the Annual Performance Report is due by 31 December each year. A common mistake is to plan Saudi Arabia as a subsidiary of a UAE company owned by a resident individual: where a resident individual has control of the foreign company, that company may not have a subsidiary or step-down subsidiary. Read our ODI checklist before fixing the structure.
UAE or Saudi Arabia — or both?
Many Indian businesses start in the UAE and add Saudi Arabia once contracts are in place. If that is your plan, compare a UAE free zone company for the first phase, and keep UAE Corporate Tax and VAT compliance in order from day one. See our Saudi Arabia page or ask for a structure review.
Sources: Investment Law, Royal Decree No. M/19 of 16/1/1446H, and its Implementing Regulations (2025); Companies Law, Royal Decree No. M/132 of 1/12/1443H; Commercial Register Law, Royal Decree No. M/83 of 19/3/1446H, and Implementing Regulations (2025); Income Tax Law and Zakat Implementing Regulation (ZATCA); VAT Law and ZATCA e-invoicing (FATOORA) guidance; India–Saudi Arabia DTAA (signed 25 January 2006); Foreign Exchange Management (Overseas Investment) Rules, 2022.