The legal route into Saudi Arabia has changed materially. Two developments matter most for international companies planning entry: the new Investment Law and its Implementing Regulations, and the Regional Headquarters (RHQ) programme. This article summarises what published legal commentary says about each, and the commercial questions they raise. It is general information, not legal or tax advice; requirements change and should be confirmed with qualified advisers and the Ministry of Investment (MISA) before decisions are made.
Key Takeaways
- Foreign investors now register with MISA rather than applying for an activity-specific investment licence.
- Registration is simpler, but restricted activities and minimum capital rules for certain activities still apply.
- Companies that want to contract with Saudi government entities need to consider the RHQ requirement early.
- Legal entry is the start of market entry, not the end: partners, people and a realistic commercial plan decide the outcome.
From licence to registration
The Investment Law was issued by Royal Decree M/19 in August 2024, and its Implementing Regulations were issued by ministerial decision in February 2025. According to analysis by the law firm Clyde & Co, foreign investors are no longer required to obtain a MISA licence and pay licence fees; instead they register with MISA before starting their investment activity, and a single registration can cover more than one sector. Registrations must be updated annually. The definition of a foreign investor has also widened to include individuals, not only companies.
Equal treatment and investor protections
The same analysis notes that the law gives foreign investors the same treatment as local investors in comparable circumstances, together with fair and equitable treatment, protection against indirect expropriation, and the ability to transfer investment-related funds such as profits and dividends in and out of the Kingdom, subject to applicable laws. The regulations also provide for a MISA-run service centre to coordinate government approvals and a formal complaints process.
What has not changed
Registration is not a free pass. Clyde & Co point out that the law and regulations do not expressly remove minimum capital requirements, which continue to apply to certain activities, and that a list of restricted or prohibited activities is maintained by a screening committee, with approval needed to operate in those areas. Companies should check the current position with MISA rather than rely on older market-entry guidance written for the previous licensing regime.
The regional headquarters rule
Since 1 January 2024, Saudi government entities have been restricted from contracting with foreign companies that do not have a regional headquarters in the Kingdom, as summarised by the law firm Mayer Brown. In return, qualifying RHQs benefit from a 0% rate of corporate income tax and withholding tax for 30 years on approved RHQ activities, alongside other benefits such as a ten-year exemption from Saudization requirements. The obligations are real: Mayer Brown note that an RHQ must begin operations within six months of its licence, employ at least 15 full-time staff within the first year including senior executives responsible for the region, and cannot itself carry out revenue-generating commercial activity, which must sit in a separately licensed affiliate.
Commercial questions to settle before choosing a route
- Who is the buyer? If government or government-linked entities are central to the plan, the RHQ question comes first. If the buyers are private companies or consumers, it may not apply.
- Which entity will trade? The structure should follow where revenue will be earned and contracted.
- What is the cost and time to a credible local presence? Staffing commitments, Saudization and leadership relocation are commercial decisions as much as legal ones.
- Which partners are needed? Distribution, joint venture and franchise routes each change the risk, the control and the speed of entry.
- What does the first year look like? A realistic pipeline, pricing and hiring plan matters more to the outcome than the speed of registration.
How we help
Karter McKinley supports companies entering Saudi Arabia and the wider Gulf with market-entry strategy, partner identification and hands-on commercial execution, working alongside clients' legal and tax advisers. See our Global Market Entry service page.
