Saudi Arabia is actively transforming its economic landscape, aiming to diversify income sources and reduce its reliance on oil revenues. A key part of this transformation is the development and expansion of the industrial sector, a central pillar of the Kingdom’s Vision 2030. The government has introduced robust regulatory frameworks, attractive incentives, and infrastructure projects to encourage both local and international investors to participate in this sector.

For companies looking to invest or establish industrial operations in Saudi Arabia, understanding the setup and licensing process is crucial. This article outlines the legal and regulatory roadmap for launching an industrial company in the Kingdom, highlighting the relevant authorities, step-by-step procedures, and licensing requirements.

Key Regulatory Authorities

Several key government entities regulate and oversee the industrial licensing and setup process in Saudi Arabia. Each authority plays a distinct role in ensuring that industrial projects align with national goals and adhere to environmental, legal, and economic standards.

1. Ministry of Investment (MISA)

MISA is responsible for granting investment licenses to foreign investors. Before setting up any industrial company, foreign investors must obtain approval from MISA. The ministry ensures that investments align with national interests and support job creation and technology transfer.

2. Ministry of Industry and Mineral Resources (MIMR)

MIMR is the main authority that issues industrial licenses. It evaluates the feasibility of projects, technical requirements, environmental considerations, and long-term sustainability. The ministry also plays a role in supporting industrial development across Saudi Arabia.

3. Saudi Authority for Industrial Cities and Technology Zones (MODON)

MODON manages industrial cities and technology zones. It provides infrastructure such as roads, power, water, and communication networks for companies operating in designated zones. MODON also offers pre-built factories and support services to ease the process of industrial setup.

4. General Authority for Meteorology and Environmental Protection (GAMEP)

This authority ensures that industrial activities comply with environmental laws and regulations. All industrial projects must undergo environmental assessment and obtain approval to proceed with operations. This includes considerations related to pollution control, waste management, and sustainable practices.

Steps to Establish an Industrial Company

Setting up an industrial company in Saudi Arabia involves a multi-step legal process. The steps differ slightly for foreign and Saudi investors but generally follow this structure:

1. Obtain an Investment License from MISA

Foreign investors must first apply for an investment license through MISA. This involves:

• Submitting a detailed business plan
• Providing audited financial statements
• Demonstrating the ability to meet legal capital requirements
• Explaining the technological or economic contribution of the project

Once approved, the investor receives a foreign investment license, allowing them to proceed with company registration.

2. Company Registration with the Ministry of Commerce

After obtaining the investment license, the next step is to register the company with the Ministry of Commerce to receive a Commercial Registration (CR). The CR is a foundational legal document and is required for all business operations in the Kingdom.

The process includes:

• Naming the company
• Drafting and notarizing the Articles of Association
• Registering with relevant government platforms such as Qiwa and ZATCA

3. Apply for Industrial License through MIMR

Once the company is registered, the next critical step is applying for an industrial license through MIMR. This license authorizes the company to carry out industrial activities in the Kingdom.

Documents required include:

• A valid Commercial Registration
• Investment license (for foreign investors)
• Lease contract or title deed of the factory
• Technical drawings and feasibility studies
• Environmental compliance certificates

4. Environmental Approval

All industrial projects must undergo an environmental assessment. The company must submit a detailed Environmental Impact Report to GAMEP. If the project complies with regulations, an environmental clearance certificate is issued.

This ensures that the industrial activity does not harm Saudi Arabia’s environment and adheres to global sustainability standards.

5. Coordination with MODON (if applicable)

If the company intends to operate within an industrial city or technology zone, it must coordinate with MODON. Services offered by MODON include:

• Land or factory rental
• Licensing of construction or modifications
• Access to infrastructure (utilities, internet, transportation)
• Support with recruitment and operations

What Are The Required Documentation?

The application process for an industrial license involves the submission of several legal and administrative documents. These include:

• Commercial Registration (CR): Must be valid and notarized.
• National Identity Card: Required for Saudi and GCC citizens not registered in the ABSHAR system.
• Financial Statements: Audited for the last fiscal year, certified by the Saudi Embassy.
• Investment License: If applicable, issued by MISA.
• Environmental Approvals: Documents that confirm environmental compliance.
• Partner Details: Disclosure of any previously issued licenses or affiliations with other Saudi businesses.
• Technical Plans: Factory layout, production line details, and equipment information.

Incomplete or incorrect documentation can lead to delays or rejection of the application, so it is advisable to consult a qualified legal advisor during this process.

Industrial Companies Licensing Fees

Understanding the cost structure is important for planning and budgeting. The government applies certain fixed and recurring fees during the licensing process.

• Industrial License Fee: SAR 2,000 per year. The license can be issued for a period of up to 5 years.
• MISA Fees for Foreign Investors:
  • First-year subscription: SAR 10,000
  • Each subsequent year: SAR 60,000
• Payment Deadline: All fees must be paid within 60 days of invoice issuance to avoid cancellation of services or legal penalties.

It is important to verify current fees with the relevant authorities, as they may change periodically based on government decisions.

Special Considerations

1. Exemptions for Small Projects

Projects with a fixed capital investment under SAR 1 million are often exempt from full industrial licensing requirements. However, they may still require environmental and safety clearances.

2. Premium Residency Holders

Investors with Saudi Premium Residency (SP1 or SP2) may benefit from a streamlined process and be exempt from providing certain documents. This can significantly reduce the time and administrative burden required to establish a business.

3. Technology and Localization Requirements

Some licenses, especially in strategic sectors like defense or pharmaceuticals, require companies to commit to technology transfer, local workforce employment, or R&D development.

4. Zakat and Tax Registration

All companies must register with the Zakat, Tax, and Customs Authority (ZATCA). Depending on company structure and origin (Saudi vs. foreign), they may be subject to Zakat, corporate income tax, or both.

Establishing an industrial company in Saudi Arabia offers numerous opportunities in a growing and strategically located economy. With the right legal guidance, companies can navigate the regulatory requirements smoothly and benefit from incentives offered under Vision 2030.

we offer complete legal support for industrial company setup, including:

• Investment license applications
• Company registration and CR issuance
• Industrial license processing
• Environmental compliance assistance
• MODON negotiations and approvals
• Ongoing legal consultancy and corporate governance

Whether you’re a local entrepreneur or an international investor, our legal team is ready to guide you through each stage of setting up your industrial operations in Saudi Arabia.

Contact us today to begin your journey in the Kingdom’s thriving industrial sector.