An industrial license in Saudi Arabia permits businesses to engage in manufacturing and production activities. Acquiring this license involves meeting specific requirements based on your business activity and company’s specifications.
This article outlines the steps to obtain an industrial license, the benefits of having one, and the regulatory framework governing industrial activities in Saudi Arabia.
For guidance on UAE business setup, see UAE Business Setup Guide: Mainland and Freezones.
To know about Saudi Arabia business setup, see A Comprehensive Guide to Company Incorporation in Saudi Arabia.
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Steps to Obtain an Industrial License in Saudi Arabia
Before starting the application process, ensure that your chosen activity requires an industrial license. General Corporate and Commercial Advisory consultants can help you in this process. Here are the steps for obtaining your Saudi Arabian industrial license:
Document Preparation
Gather all essential documents, including:
- Business plan
- Project details
- Company details
- Financial statements
- Information of all shareholders
- Approvals from relevant authorities
Application Submission
You can apply online or in person. Online applications are more efficient and cost-effective. Use the Ministry of Industry and Mineral Resources portal to submit your application. Enter all required details, upload the documents, and pay the fees.
The Ministry of Industry and Mineral Resources (@mimgov) extended the term of industrial licenses to five years from three years.https://t.co/Lyr8F17VFE
— Saudi Gazette (@Saudi_Gazette) June 20, 2021
Application Review
The Ministry of Industry and Mineral Resources will review your application. You can make changes before approval, as post-approval modifications involve a more complex process.
Approval and Additional Licenses
Wait for the approval. During this time, secure other relevant licenses, such as those from land authorities or municipalities, if needed.
License Issuance
Upon receiving approval, the Saudi Ministry of Industry and Mineral Resources will issue the license, enabling you to start your business operations.
For a smoother process, consider consulting business setup experts. Always check the processing time, ensure all documents are ready, and stay updated with regulations and legal changes.
National Industries Commercial Act
The National Industry Encouragement Act, approved by Royal Decree No. M/50 dated 23/12/1381 AH, offers several benefits to existing and emerging industries:
Customs Duty Exemptions
Imported industrial products, including equipment, machinery, tools, spare parts, raw materials, and packaging materials, are exempt from customs duties.
Factory Land and Worker Housing
Factory construction land and worker housing are provided at symbolic rents.
Local Production Support
The import of goods similar to locally produced ones is restricted to support local production.
Financial Assistance
Expanded financial support is available for industrial enterprises.
Tax Exemptions
Local products are exempt from export duties and all other taxes and fees.
Concessions 1 and 2 are granted by the Minister of Industry and Electricity based on the Ministry of Technology and Industry Bureau’s recommendations. Concessions 3 and 4 are approved by the Council of Ministers on the Minister of Industry and Electricity’s advice. Concession 5 is governed by a Royal Decree based on the Council of Ministers’ decree.
Benefits of Having an Industrial License in Saudi Arabia
Industrial licenses cover key sectors such as steel, food, polymers, and chemical production. Here are the potential benefits:
Regulatory Compliance
Ensures compliance with rules and regulations, avoiding legal issues and gaining customer trust.
Market Access
Enables manufacturing, scaling, and selling products in the Saudi market and beyond.
Government Privileges
Enjoys tax exemptions, financial support, and workforce hiring benefits.
Customer Trust
Demonstrates commitment to quality, gaining customer trust.
Government Projects
Licensed companies get priority in government projects.
Local Value Addition
Reduces dependency on imports, adding value to local products.
Job Creation
Industrial growth increases job opportunities in Saudi Arabia.
Regional Hub
Supports Saudi Arabia’s aim to become a regional manufacturing hub.
The Saudi government continues to implement measures to enhance the economy and establish Saudi Arabia as a global industrial hub.
Key Points about the Industrial License in Saudi Arabia
For a better understanding of license categories and their assigned numbers, refer to the regulations for issuing an industrial license for establishing a unit:
Regulations for Establishing an Industrial Unit
National Industrial Encouragement Law
Applicable to Saudi nationals, allowing them to establish industrial companies within Saudi Arabia with Saudi capital.
Foreign Capital Investment Law
Applicable to foreigners planning to set up a business or project in Saudi Arabia.
Rules for Registering Your Industrial License
Capital Requirements
Projects with a fixed capital of 1 million riyals do not require approval from the Ministry of Industry and Mineral Resources but must be recorded in the business register.
Application Process
Obtain forms from the Ministry’s Industrial Project Evaluation and Licensing Department. Submit the completed form with required documents to the Department of Commerce. After approval, the form will be moved to the business registration office, which will contact the investor to complete the registration process either in person or online.
Documents for Obtaining Your Saudi Industrial License
Prepare the following documents for your application:
Partner Information
Include details of any partners who have previously obtained industrial licenses.
Financial Statements
For foreign companies, provide the previous year’s financial statements certified by the Saudi Embassy.
Commercial Registration
A Saudi Embassy-certified copy of the commercial registration of all shareholders.
Identity Proofs
Enter your Saudi national identity number during electronic registration and provide identity proofs of all shareholders.
Exemptions
Premium residence holders are exempt from some document requirements.
After submitting all the necessary details and documents, approach the Ministry of Industry and Mineral Resources to obtain the industrial license in Saudi Arabia.
By following these guidelines and understanding the regulatory framework, you can successfully navigate the process of acquiring an industrial license in Saudi Arabia, positioning your business for growth and success in the region.
Obtaining an industrial license in Saudi Arabia is a crucial step for businesses looking to engage in manufacturing and production within the Kingdom. The process, while detailed, is structured to ensure compliance with local regulations and to support the growth of the industrial sector. By understanding the requirements, preparing necessary documents, and leveraging online resources, businesses can streamline their application process.
The benefits of holding an industrial license are substantial, including regulatory compliance, market access, government support, and enhanced credibility. The Saudi government’s proactive measures to foster industrial growth and economic diversification make it an opportune time for businesses to invest in this vibrant market.
For both local and foreign investors, navigating the regulatory landscape with the assistance of business setup consultants can further simplify the process, ensuring all requirements are met efficiently. As Saudi Arabia continues to position itself as a regional and global industrial hub, obtaining an industrial license can be a significant step toward achieving business success and contributing to the country’s economic development.
