Industrial License in Saudi Arabia: A Comprehensive Guide

May 24, 2024by Kartik Shetty0

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.

To incorporate a company in the UAE, Saudi Arabia, or any GCC countries, you may book a free consultation. 

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. 

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. 

Disclaimer

The opinions expressed in this blog are those of the respective authors. ATB Legal does not endorse these opinions. While we make every effort to ensure the factual accuracy of the information provided in our blogs, inaccuracies may occur due to changes in the legislative landscape or human errors. It is important to note that ATB Legal does not assume any responsibility for actions taken based on the information presented in these blogs. We strongly recommend verifying information from official sources and consulting with professional advisors to ensure its accuracy and relevance to your specific circumstances.

About ATB Legal

ATB Legal is a full-service legal consultancy in the UAE providing services in dispute resolution (DIFC Courts, ADGM Courts, mainland litigation management and Arbitrations), corporate and commercial matters, IP, business set up and UAE taxation. We also have a personal law department providing advice on marriage, divorce and wills & estate planning for expats.

Please feel free to reach out to us at office@atblegal.com for a non-obligatory initial consultation.

by Kartik Shetty

Kartik is a legal consultant at ATB legal, with a unique blend of skills for civil, corporate and commercial matters. He is a law graduate from Shivaji University, Mumbai and postgraduate from Pune University. He writes about family law and corporate and commercial matters.

Leave a Reply

Your email address will not be published. Required fields are marked *

five + five =

Copyright, Privacy Policy, Sitemap, Disclaimer