Saudi Arabia

Ease of Doing Business Rank: 62

Overview

 

Geographic location

The Kingdom of Saudi Arabia is a country in southwest Asia.

Jordan and Iraq lie to the north, Egypt and the Red Sea lie to the west, Yemen and Oman lie to the south, and the Persian Gulf and the United Arab Emirates lie to the east.

Spoken language

The official language of Saudi Arabia is Arabic spoken by almost all Saudi natives. Minority languages include Tagalog, Rohingya, Urdu and Egyptian Arabic.

English is most widely spoken in business and a compulsory second language in education.

Population

The 2019 population estimate is 34.14 million.

According to the 2016 data from the Government of Saudi Arabia, Riyadh is the largest city (6,506,700), followed by Jeddah (3,976,400), Mecca (1,919,900), Medina (1,271,800), Hofuf (1,136,900) and Ta’if (1,109,800).

Popular industries

The top industries in Saudi Arabia are crude oil production, petroleum refining, petrochemicals, ammonia, industrial gases, sodium hydroxide, cement, fertilizer, commercial aircraft repair, commercial ship repair, metals and construction.

Education

The Times Higher Education World Rankings includes five Saudi Arabian universities in the top 1,000 in the world.

The Legatum Prosperity Index ranks Saudi Arabia’s education system 68 out of 149.

Popular entity types

The most common type of business entities in Saudi Arabia are Limited Liability Company, Joint Stock Company and Limited Partnership.

The overwhelming majority of businesses are in the form of a Limited Liability Company.

Saudi Arabia incentives for business

Saudi Arabia does not offer a foreign tax credit. Non-resident companies are taxed on income arising from or related to a permanent establishment.

However, the government grants tax concessions in underdeveloped regions to encourage investment. These include Ha’il, Jazan, Najran, Al-Baha, Al-Jouf and the Northern territory.

Tax reductions last for ten years from project inception. They include a 50% reduction based on annual expenses for training Saudis, a reduction of 50% of salaries paid to Saudis and a 15% reduction of qualifying non-Saudi expenditures. Incentives increase for projects exceeding SAR 1 million and employing more than five Saudi nationals for at least one year.

Qualifying companies enjoy custom duties exemption on machinery and raw materials providing these are not available within the local market. Preapproval is required.

History & Features

 

Main cities for business

Riyadh is the capital city and financial center of the country.

Popular historical & tourist attractions

Saudi Arabia is a country of dichotomies. From its humble roots of nomadic tribes sprang an international economic powerhouse. You’ll find outstanding archeological and natural wonders and jaw-dropping modern architecture unlike anywhere else in the world.

The country has five UNESCO World Heritage Sites, including petroglyphs and rock inscriptions in the Hail region which document 10,000 years of history.

Al-Ahsa oasis is the largest in the world. It traces human settlement in the Gulf region from the Neolithic Age and includes gardens, canals, springs, historic fortresses, mosques, wells and 2.5 million date palms.

In Mecca, you’ll find the Al Masjid Al Haram Mosque, the largest in the world. Current renovations will increase the capacity to 2.5 million worshippers. It is considered the holiest structure in Islam and draws pilgrims from around the globe.

Saudi Arabia also has many areas of outstanding natural beauty, including the stunning Al Wahbah volcanic crater. This marvel sits in the midst of the desert and has a salt field in its center. The crater is 820 feet deep and has become a popular destination for ambitious hikers.

The sandy beaches of Umluj on the Red Sea are often referred to as the Saudi Maldives. Balmy year-round temperatures, turquoise waters, coral reefs teeming with sea life and dramatic views of volcanoes and lava fields are quickly making this region a popular tourist destination.

Riyadh is very modern and packed with large shopping malls and skyscrapers. It’s easy to spot the business district as the 41-storey Kingdom Tower with sky bridge dominates the skyline. The National Museum in Riyadh is the largest and most visited in the country and one of the biggest in the Middle East.

In Mecca, you’ll find the Abraj Al-Bait. This complex of seven skyscraper hotels includes the world’s largest clock face on the third-tallest building in the world.

History

Nomadic civilizations dominated Saudi Arabia’s early history. Later, the peninsula was an ancient trade center between the Nile River Valley and Mesopotamia.

The area is also considered to be the birthplace of Islam around 610 AD. Within 100 years, the Islamic Empire extended from Spain to parts of India and China. This empire thrived well into the 17th century. Then the empire divided into smaller kingdoms, but the Arabian Peninsula remained the spiritual center.

The first Saudi state appeared in the early 18th century when the Al-Saud family gained power and prominence and promoted a return to the original form of Islam. The family regained control and recovered their lands after a devastating Ottoman siege in 1818.

The new state enjoyed peace, prosperity, and trade until the Ottomans invaded again in 1865. The Saudi ruler was forced to flee in 1891 and did not return until 1902. By 1925, he had recaptured the region and united the tribes. In 1932, the country became the Kingdom of Saudi Arabia.

During World War I, the need for oil piqued interest in the area. The first oil discovery in Dhahran in 1938 started an age of rapid modernization, infrastructure and growth.

The country’s production of about 10 percent of the world’s oil led to them becoming a tremendous political and economic force. Their economy is within the top 20 in the world with a new focus on diversification due to the downturn in the oil industry. They operate under an absolute monarchy.

Other relevant facts

Most Saudis are Arab (90%) followed by Afro-Asian (10%).

Islam is the state religion required by law. Between 75 and 85% of Saudi Arabian citizens are Sunni Muslims while 10 to 15% are Shia. Foreign workers make up approximately 30% of the population who are predominantly, but not entirely, Muslim.

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Saudi Arabia is the 51st best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Saudi Arabia 91st globally and states, “Higher oil prices allowed the fiscal deficit to shrink from 26 percent of GDP in 2016 to 9 percent in 2018. A planned value-added tax and subsidy cuts would reduce it further. Other reforms to improve regulatory efficiency would enhance overall competitiveness.”

World Bank’s “Doing Business” rankings rate Saudi Arabia 62nd for ease of doing business in the world.

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