When you want to establish a logistics company in the country, you must take into account what processes you will have to follow. Likewise, by complying with all regulations and laws, you will be able to get your business up and running quickly. Also, keep in mind that these types of companies are some of the most profitable in Saudi Arabia.
In this article, you will learn how to start up a logistics company in Saudi Arabia without any problems. Also, what are all the aspects you should take into account in this regard.
Compelling factors for selecting a logistics company in Saudi Arabia
Before we start talking to you about the reasons for settling in Saudi Arabia, we will answer what is logistics company. In this case, these are companies that transport and store merchandise for both companies and individuals. Therefore, these types of companies have a network of warehouses and vehicles for this purpose.
Likewise, many of them have extra services such as packaging, assembly, and customization adapted to their clients. Logistics companies play a prominent role in the economy of the country. This is because they allow many businesses to operate seamlessly thanks to the movement of goods and materials in Saudi Arabia.
Furthermore, with the expansion of the local economy, authorities expect growth in the logistics operations sector. Thus, it is an auspicious opportunity for you to start your own logistics company in the Kingdom of Saudi Arabia. Likewise, you can establish one of the different companies of this type, such as transportation, storage, or value-added services.
However, depending on your business capabilities, you may be able to offer these services in combination. In this way, you will be able to become one of the leading logistics service providers in Saudi Arabia.
Reasons to start a logistics company in KSA
As is well known, Saudi Arabia is the largest nation in the Middle East and has a huge oil reserve. In addition, it offers great investment opportunities for foreigners, contrasting with the other Arab nations in the regional bloc. Moreover, the reasons for establishing your logistics company in Saudi Arabia are the following:
- As a foreign investor, you will find the business setup process very beneficial as you can do it online, which saves time.
- Your company will operate in a social and commercial environment that promotes investment.
- The country generates confidence for foreign investors, as well as its clients, to improve commercial exchange.
- Saudi Arabia has one of the most important social and labor infrastructures in the world. In this way, you not only obtain luxury and quality benefits for your logistics company but also for your family and partners.
- The authorities offer fiscal facilities such as tax rebates, fiscal support, tax-free transactions, and free zone facilities. Similarly, you may obtain other tax incentives if the company favors national interests.
- You will find well-furnished commercial spaces, with all the facilities to establish your business offices.
- The Kingdom of Saudi Arabia is in a strategic location that allows connection to important global markets. Therefore, you can carry out commercial transactions at your convenience and with the facilities offered by the national market.
Steps to Establishing a Logistics Company in Saudi Arabia
The process of how to set up a logistics company is similar to establishing other businesses in Saudi Arabia. However, you will need to obtain specific licenses for the niche of your logistics business. Below, we will show you all the details of the process to start operating your business in KSA.
Research and Planning
To get started, you should conduct thorough research on the market you want to enter, including laws and establishment regulations. In this case, you must identify the demand for this type of service in the different regions of the Kingdom. Additionally, you should be aware of potential competitors, as well as evaluate the appropriate niche for your business.
Legal Structure and Registration
In Saudi Arabia, there are various types of legal entities, although the most commonly chosen by foreigners is the Limited Liability Company (LLC). Therefore, you should start by registering with the Saudi Arabian General Investment Authority SAGIA. This way, you can opt for a license for your logistics company in the country.
After that, you can begin the process of registering your business with the Ministry of Commerce and Industry (MOCI). In addition, the process to obtain the license can take about 5 business days, which can be extended for up to 15 years. The documents necessary to request the commercial license are those that we will mention below:
- Declaration of investment intention in Saudi Arabia by the board of directors.
- Description of the investment plan along with the economic impact
- Documentation that proves the financial capacity of the investors for the Saudi logistics company.
Reserve the name of your logistics company
You must reserve your company name with the Ministry of Commerce and Industry, following the rules established in the country. The reservation process can be done online and free of charge and will only take 1 business day.
Articles of Association (AoA) and Notarization
You must submit the Articles of Association (AoA) of your business for authentication at the Ministry of Commerce. In this case, it will also take you a single day to submit this document and there is no fee associated with it. Then, you must go to the notary office so that they can carry out the notarization process in approximately 3 days.
Pay the registration fee
The next step in registering your logistics company is to pay the corresponding fee. This process will take only one day and you must do it at the Bank at the Unified Center (UC) facilities. In this case, the rate is SAR 650, with which the authorities will publish the Articles of Association mentioned above.
Another aspect of how to start a logistics company that you should consider is obtaining the registration certificate. Hence, after obtaining your SAGIA license, you will need to register your company with the Ministry of Commerce (MoC). In this way, you must formulate the AoA according to the Companies Law of Saudi Arabia.
The commercial registration certificate (CR) is issued by the authorities in electronic format, which corresponds to the certificate of incorporation. Additionally, it includes the commercial license for your business which together can take 2-4 weeks. Furthermore, you must renew your CR annually to maintain compliance with local laws.
Registration with the Ministry of Labor (MOL)
To hire foreign employees, you will need to obtain Saudi work permits and visas, so you must register with the Ministry of Labor. This way, you will be able to comply with the MOL rules and regulations and benefit from it. In this case, you can hire foreign talent as long as they meet the eligibility criteria.
Registration in Gosi
Another step to starting a logistics company is to register with GOSI, with which you will be able to pay your employees. You can do this registration by following these steps:
- Company registration. Start by registering with GOSI, at KASA, before hiring your national or foreign staff. To do this, you will have to provide the company data such as name, contact information, legal documents, and address.
- Employee registration. Then, register your employees in GOSI by placing Saudis and foreigners individually as officials.
- Make the corresponding payments. Finally, you must pay GOSI contributions monthly. You can calculate this amount by the number of employees you registered and the salaries of each one, which you will present on the GOSI website.
The Website of the General Organization of Social Security is a system to manage registration and payments. Additionally, you can do various tasks with this platform such as registration, sending payments, and accessing reports.
Registration with Zakat
The logistics company and any company in general have to register with the Zakat authority. After registering with the Tax and Customs Authority, ZATCA, you will have to pay your taxes including VAT declaration. Likewise, through this platform, you can make corporate income tax payments and tax withholding payments.
Additionally, in this portal, you will have the possibility of managing everything related to taxes, which is important for your company. In this case, you will comply with the laws and regulations of Saudi Arabia regarding tax matters.
Obtain Necessary Licenses and Permits
A crucial step for your KASA logistics company is to acquire an investment license from the Saudi General Investment Authority. Otherwise, you will not be able to start any business in Saudi Arabia.
In the same way, the process can be done by sending the certified application form to SAGIA. Likewise, the entire process can be online or offline depending on your convenience. Additionally, with this registration, you will obtain documents such as registration and unique number. Each of them will need to obtain them by registering with the Chamber of Commerce.
Notarization of business documents
Your company documents must be notarized, which can be done online, which will save you time, which is beneficial for you. Likewise, the process must be completed when the AoA of the company is ready and has approval from the related authority. Below are the documents you must present for this:
- The original AoA company document
- Photocopy of the SAGIA license
- Signed knowledge of all shareholders and company directors
- Corporate documentation of all shareholders
- Photocopies of passports of at least two company witnesses and identification cards
- Color copy of the passports of directors and partners
Opening a bank account
To complete the process of opening a logistics company, you will have to open a bank account. In this case, through this account, you will be able to present government fees in various processes. Likewise, a corporate bank account must be opened to comply with the incorporation process in KSA. In addition, opening the account will take 1 business day and there will be no charge.
Set up office space
Set up some premises for your company offices, which will give you a corporate address, which is a requirement for a company in KSA. Likewise, by ensuring this step, you may be eligible to obtain a license from the municipality. With the said license you will fulfill part of the obligation to start a company in Saudi Arabia.
Acquire the commercial certificate
Finally, to start a logistics company in KSA, you must apply for and acquire a business certificate. Likewise, the paperwork and documents will be attached to be submitted to the Registry of the Saudi Ministry of Commerce and Industry. Likewise, processing, verification, and approval will take 2 business days.
Receive a membership in the Chamber of Commerce
When you register with the Chamber of Commerce, you will receive a membership certificate, which will be required to start a company in KSA. However, for the membership certificate, you will need to pay a fee of SAR 2000. In this case, you can take the application and fees to the unified center in Saudi Arabia.
Set Up Operations
Once you have completed the entire process mentioned above, you will be able to start the operations of your logistics company with complete security. However, you must maintain compliance with labor laws so your business can establish and grow.
What is the startup expense associated with establishing a logistics company in Saudi Arabia?
Next, you will see what the costs are for setting up an LLC in Saudi Arabia:
- There will be no charge for the reservation of the commercial name of the company.
- For a SAGIA license: 2000 SAR
- There will be no charges for the notary for the company papers.
- Publication of the company newsletter will cost you from SAR 650 to SAR 5500
- There are no charges for opening the bank account but you will need an initial deposit of SAR 100000 for the LLC
- For the office premises, you will pay around SAR 1500 to SAR 4000
- A Commercial Certificate can cost you from SAR 0 to SAR 8100
- For the Chamber of Commerce Membership Certificate, you will pay SAR 2000
How can one obtain a license to establish a logistics company in Saudi Arabia?
To set up a company in KSA, you need to start with the Ministry of Investment, MISA. Previously, this entity was known as the Saudi Arabian General Investment Authority, by its acronym SAGIA. This body is responsible for supervising foreign investments in the country.
Generally, the license application process time will take around 2 to 4 weeks. Likewise, before it loses validity, you must renew it.
Consequently, when you decide to find a logistics company in the country, you just need to make sure that you comply with the law. In this way, your company will begin its operations in the territory without any legal problems. However, if in addition to the information we provide here, you want more information, you can contact us and our team will help you.