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How to do business in Saudi Arabia

Legal considerations

Islamic Law (Sharia) is the law of the land in all cases. Other laws are enforced only if they do not violate the rules of Sharia. Unlike in common law jurisdictions, legal judgments are not published so there are no binding precedents.

The main government laws relating to business include:

  • government tenders and procurement laws

  • foreign investment laws

  • employment law, including Saudisation

  • Zakat, the religious wealth tax, and income tax law

Contact the DIT team in Saudi Arabia at: https://www.gov.uk/world/organisations/department-for-international-trade-saudi-arabia#contact-us for help finding tax and legal advisers before entering into agreements.

Standards and technical regulations

The Saudi Standards, Metrology and Quality Organization (SASO) at: https://www.saso.gov.sa/en/pages/default.aspx has implemented a Conformity Assessment Programme (CAP) covering goods destined for Saudi Arabia.

CAP requires quality checks and inspections on companies looking to export to Saudi Arabia. Proof should be provided in the form of a Certificate of Conformity. See SASO at: https://www.saso.gov.sa/en/quality/Pages/The_Certificate_of_Conformity_Regulations.aspx for details of Certificate of Conformity regulations.

The Saudi Ministry of Commerce and Investment provides details of import procedures. See: https://www.mci.gov.sa/en/LawsRegulations/Pages/default.aspx.

You should consider taking out product liability insurance if you manufacture or supply a physical product that is sold or given away for free. See: https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/business-insurance/liability-insurance/product-liability-insurance/.

UK companies entering into agreements in Saudi Arabia should contact the DIT team in Riyadh at: https://www.gov.uk/world/organisations/department-for-international-trade-saudi-arabia#contact-us for a list of lawyers offering professional advice.

Export licences for Saudi Arabia

You must apply through the relevant government ministries for licences to do business in Saudi Arabia. Contact DIT in Saudi Arabia for further advice on the appropriate processes, at: https://www.gov.uk/world/organisations/department-for-international-trade-saudi-arabia#contact-us.

You can find out about getting a licence to export dual use goods, services or technology to Saudi Arabia at: https://www.gov.uk/guidance/beginners-guide-to-export-controls.

To find out which products will need certification or licensing before they can be exported to Saudi Arabia, see: https://www.gov.uk/starting-to-export/licences.

Law on marketing and selling

If you are selling to consumers you must be aware of and comply with relevant Saudi Arabian consumer protection laws. It is recommended you consider using an agent in Saudi Arabia to provide customer support services. 

Because of the complexity of the regulations, it is recommended you take advice from an agent, or contact DIT at the British Embassy Riyadh first. DIT in Saudi Arabia can help you identify and meet potential agents and distributors. See: https://www.gov.uk/world/organisations/department-for-international-trade-saudi-arabia#contact-us.

 

Taxation

Taxation is a specialised subject and advice should be sought from specialists practising in Saudi Arabia as part of the planning stage for doing business in this market.

Income tax

There are no personal taxes in Saudi Arabia. This includes foreign nationals. Saudi and GCC nationals are subject to Zakat.

Sales tax

There is currently no Value Added Tax (VAT) or sales tax in Saudi Arabia.

Corporation tax

Companies are generally obliged to pay 20% corporate tax. Foreigners who receive net income from investments in Saudi businesses, and self-employed individuals who do business in Saudi Arabia are subject to corporate tax on a sliding scale.

Double-taxation agreement

The UK and Saudi Arabia signed a double taxation agreement. This allows some taxes paid in one country to be deducted in the other. See: www.gov.uk/government/publications/saudi-arabia-tax-treaties.

You can zero-rate the sale of your goods to Saudi Arabia, provided you get and keep evidence of your export, and comply with all other laws. You must also make sure the goods are exported, and you must get the evidence within three months from the time of sale.

More information on GST in non-EU markets can be found at: https://www.gov.uk/guidance/vat-exports-dispatches-and-supplying-goods-abroad.

Excise duty

You should check you have paid excise duty on any energy products, electricity or tobacco products you send to Saudi Arabia.

[Source – DIT/ gov.uk]

 

Customs

The Saudi Customs website provides information on Saudi customs procedures. See: https://www.customs.gov.sa/en/International-customs-guide (the downloadable guide is in Arabic).

Import licences

You must apply through the relevant government ministries for licences to do business in Saudi Arabia. Contact DIT in Saudi Arabia for advice on the latest appropriate processes, at: https://www.gov.uk/world/organisations/department-for-international-trade-saudi-arabia#contact-us.

Tariffs

There are import controls on a number of products such as pork products and alcohol. You should therefore check with Saudi Customs that your product is not on their list of prohibited or restricted items.

Import duty and taxes are due when importing goods into Saudi Arabia whether by a private individual or a commercial entity. The valuation method is CIF (cost, insurance and freight), which means that the import duty and taxes payable are calculated on the complete shipping value, which includes the cost of the imported goods, the cost of freight, and the cost of insurance.

Duty rates in Saudi Arabia vary from 0% to 50%, with the average duty rate at 4.58%. Some products can be imported free of duty (e.g. books, laptops and other electronic products).

The customs tariff on the majority of imported goods is 5%. There is also a protective tariff of 12% or 20% on some imports in order to support certain national industries. 50% excise tax is being introduced on soft drinks and a 100% tax on cigarettes, tobacco products, and energy drinks.

Import duties can change at short notice so you should check the Saudi Customs advice for the latest GCC Integrated and Saudi-specific tariffs at: https://www.customs.gov.sa/en/Integrated-Tariff.

You can find out about import tariffs at the EU’s Market Access Database (MADB). See: http://madb.europa.eu/madb/indexPubli.htm.

The MADB also has a full list of trade barriers for Saudi Arabia at: http://madb.europa.eu/madb/barriers_result.htm?isSps=false&countries=SA&measures=15.

Complying with HMRC regulations to export to Saudi Arabia

You must make export declarations to HMRC through the National Export System (NES) to export your goods to Saudi Arabia. See: https://www.gov.uk/guidance/export-declarations-and-the-national-export-system-export-procedures.

You can find out how to declare your exports to Saudi Arabia through the NES at: https://www.gov.uk/guidance/export-declarations-and-the-national-export-system-export-procedures. You must classify your goods as part of the declaration, including a commodity code and a Customs Procedure Code (CPC).

Commodity codes and other measures applying to exports in the UK Trade Tariff can be found at: https://www.gov.uk/trade-tariff.

Contact the HMRC Tariff Classification Service at: https://www.gov.uk/government/publications/notice-600-classifying-your-imports-or-exports/notice-600-classifying-your-imports-or-exports#list-of-useful-contacts for more help.

You must declare any goods that you take with you in your luggage to sell outside the EU. See: https://www.gov.uk/take-goods-sell-abroad for further information.

Temporary export of goods

Saudi Arabia does not recognise the ATA (Admission Temporaire/Temporary Admission) Carnet system. You therefore need to use a duplicate list to temporarily export goods to Saudi Arabia. As with an ATA Carnet, you do not have to pay customs duty or tax. There is no fee. See: https://www.gov.uk/taking-goods-out-uk-temporarily/duplicate-list.

Before you export the goods, prepare a list on company stationery. Including:

  • a description of the goods

  • how many there are

  • serial numbers, if the goods have them

  • value of the goods

At customs, you will need to provide:

Contact the HMRC Imports and Exports Helpline in advance to make the arrangements:

  • telephone: 0300 200 3700

  • textphone: 0300 200 3719

  • outside the UK: +44 29 2050 1261

  • Monday to Friday, 8am to 6pm

Documentation

The documents required for import and export of goods to and from Saudi Arabia are:

  • copy of commercial registration

  • invoices – initiated by supplier

  • certificate of origin

  • bill of lading/air waybill

  • insurance documents (if sent CIF)

  • documents indicating compliance with health regulations (if applicable)

  • packing list

  • certificate of conformity with Saudi standards (if applicable)

  • certificate of origin of Saudi products (issued by the Ministry of Commerce and Investment at: https://www.mci.gov.sa/en/Pages/Default.aspx)

You should consider working with a Saudi Arabian Customs Agent. Contact the DIT team in Saudi Arabia at: https://www.gov.uk/world/organisations/department-for-international-trade-saudi-arabia#contact-us for further advice and lists of agents.

[Source – DIT/gov.uk]

 

Shipping your goods to Saudi Arabia

If you are not knowledgeable about international shipping procedures you can use a freight forwarder to move your goods. A forwarder will have extensive knowledge of documentation requirements, regulations, transportation costs and banking practices in Saudi Arabia.

You can find freight forwarding companies to help you transport your goods to Saudi Arabia via the British International Freight Association (BIFA) at: http://www.bifa.org/home or the Freight Transport Association (FTA) at: http://www.fta.co.uk/.

Posting goods

You can find out about sending goods by post to Saudi Arabia at: http://www.royalmail.com/saudi-arabia.

Shipping restricted, banned and dangerous goods

Special rules apply if you are shipping dangerous goods to Saudi Arabia. See: https://www.gov.uk/shipping-dangerous-goods/what-are-dangerous-goods for more information.

You should consider working with a local agent who can advise on the latest import licensing requirements. Contact the DIT team in Saudi Arabia at: https://www.gov.uk/world/organisations/department-for-international-trade-saudi-arabia#contact-us for assistance and information about third-party advisers.

Terms of delivery

Your contract should include agreement on terms of delivery using incoterms: https://www.gov.uk/guidance/international-trade-paperwork-the-basics#international-trade-contracts-and-incoterms.

UK Export Finance

The UK Government can provide finance or credit insurance specifically to support UK exports through UK Export Finance (UKEF) – the UK’s export credit agency. See: https://www.gov.uk/government/organisations/uk-export-finance.

For up-to-date country-specific information on the support available see UKEF’s cover policy and indicators for Saudi Arabia at: https://www.gov.uk/guidance/country-cover-policy-and-indicators#saudi-arabia.

[Source – DIT/UKEF/gov.uk]


 

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