Setting Up a Business in Saudi Arabia: A Strategic Guide for Investors and Entrepreneurs

Saudi Arabia has emerged as one of the most important markets for businesses looking to expand in the Middle East.

Driven by Vision 2030, economic diversification, major infrastructure and development projects, private-sector growth and increasing international investment, the Kingdom is creating opportunities across a wide range of industries.

For entrepreneurs, investors and businesses from Pakistan, the GCC and other international markets, Saudi Arabia deserves serious consideration as a potential market for expansion.

But there is an important distinction between entering a market and building a successful business in that market.

Setting up a company is only the beginning.

The more important questions are:

A successful Saudi market entry should therefore be approached as a business decision—not simply a company registration exercise.

Why Are Businesses Looking at Saudi Arabia?

Saudi Arabia's economic transformation under Vision 2030 has created opportunities well beyond its traditional oil-based economy.

The Kingdom is developing and expanding sectors including tourism, technology, manufacturing, mining, logistics, healthcare, financial services, entertainment, renewable energy and other areas of the non-oil economy.

The country's investment framework has also evolved significantly. The updated Investment Law was designed to support economic diversification, increase private-sector participation, facilitate investment and provide a more competitive and transparent investment environment. The framework applies to both local and foreign investors, while foreign investors are required to register with the Ministry of Investment before undertaking investment activities, subject to the applicable regulations and restrictions.

The scale of investment activity is also significant. Saudi Arabia's 2025 Vision 2030 Annual Report reported preliminary net foreign direct investment inflows of approximately USD 32.5 billion in 2025, reflecting the continued development of the Kingdom as a destination for international investment.

These developments make Saudi Arabia an attractive market to explore.

However, market attractiveness does not automatically mean that every business model will succeed.

That is where preparation becomes critical.

Before Asking "How Do We Set Up?", Ask "Should We Set Up?"

When businesses consider entering a new market, the conversation often starts with questions such as:

• Which legal structure should we choose?
• What license do we need?
• Where should we establish the business?
• How quickly can we start?
• What will the setup cost?

These are important questions.

But they should come after a more fundamental assessment:

A business that performs well in Pakistan, the UAE, the UK, the USA or another market may not automatically achieve the same results in Saudi Arabia.

Customer behavior may be different.

Competition may be different.

Pricing may need to change.

Operating costs may be higher or lower than expected.

Hiring requirements may affect the business model.

Working-capital requirements may be underestimated.

The regulatory environment may require systems and processes that the business does not currently have.

This is why market research, and feasibility assessment should ideally precede significant investment.

Don't Enter Saudi Arabia on Hit-and-Trial

One of the costliest approaches to a new market can be:

A new business may incur substantial costs before it develops a stable revenue base.

These can include:

• Business establishment and professional costs
• Office and operating expenses
• Recruitment and employee-related costs
• Technology and systems
• Marketing and business development
• Travel and relationship-building expenses
• Working capital
• Accounting and compliance costs
• Customer acquisition costs

Revenue, however, may take time to develop.

This can create a significant cash-flow gap during the initial months of operation.

A better approach is to enter the market with a defined commercial strategy, realistic financial assumptions and contingency plans.

Start With a Feasibility Study

A feasibility study should not be viewed as just another formal business document.

Done properly, it can help answer whether the proposed business has a realistic opportunity to succeed—and under what conditions.

A Saudi market feasibility assessment may consider:

Market Opportunity

• Who are the potential customers?
• What is the size and nature of the addressable market?
• What problem does the business solve?
• Is there sufficient demand?
• Who are the competitors?
• What are customers currently paying?
• What differentiates the proposed offering?

Business Model

• What should the business sell?
• How should it price its products or services?
• What revenue model makes sense?
• What margins are achievable?
• How will customers be acquired?
• What sales volume is required to reach break-even?

Investment Requirements

• How much capital is required initially?
• What are the expected setup and operating costs?
• How much working capital will be required?
• How much cash should be retained for the initial operating period?

Financial Sustainability

• When could the business realistically reach break-even?
• What happens if revenue takes longer to develop?
• What happens if costs are higher than expected?
• How sensitive is profitability to pricing and sales volume?
• How much additional funding may be required under different scenarios?

Risk Assessment

• What are the key commercial risks?
• What regulatory or compliance considerations could affect the business?
• What operational risks exist?
• Which risks can be controlled?
• Which risks require contingency planning?

A feasibility study can therefore help management move from assumption-based decision-making to evidence-based decision-making.

Have a Plan A, Plan B and Plan C

A good feasibility exercise should not simply ask:

It should also ask:

This is particularly important when entering a new market.

Plan A

The expected market opportunity, customer acquisition strategy and revenue assumptions broadly materialize.

Plan B

Revenue takes longer than expected.

The business may need to operate with a leaner cost structure, adjust its marketing strategy, target different customer segments or revise its initial investment plan.

Plan C

The original market proposition does not perform as expected.

The business may need to reposition its offering, change its target market, introduce additional services, modify pricing or reconsider the scale and timing of its investment.

The purpose of Plan A, B and C is not to predict the future perfectly.

It is to make sure that the business has options when reality differs from the original plan.

Choosing the Right Market-Entry Strategy

There is no single approach that works for every business entering Saudi Arabia.

The appropriate structure and market-entry model depend on factors including:

• Nature of the business
• Proposed activities
• Ownership
• Investment objectives
• Target customers
• Scale of operations
• Long-term growth plans
• Applicable regulatory requirements

Saudi Arabia's updated Investment Law provides a broader and more modern investment framework, including provisions concerning investment freedom, investor rights, registration and activities that may be restricted or excluded for foreign investors.

This is why businesses should be cautious about relying on generic statements such as:

"This is the structure everyone uses."

The right approach is to first understand the business model and then determine the appropriate structure around it.

Business Setup Is Only the Beginning

Successfully establishing a business does not mean the work is finished.

In many ways, it is where the real work begins.

Once operations start, businesses need to consider:

• Accounting records
• Financial reporting
• Tax obligations
• VAT
• E-invoicing
• Payroll and employee-related matters
• Corporate records
• Regulatory filings
• Internal controls
• Cash-flow management
• Management reporting
• Budgeting and forecasting

These are not simply administrative requirements.

They directly affect management's ability to understand whether the business is performing as expected.

Tax and ZATCA Considerations Should Be Built In From the Start

Saudi Arabia has a structured tax and compliance environment covering areas including VAT, income tax, withholding tax and Zakat, depending on the circumstances of the business.

This means tax should not be treated as an issue to address only after the business has started operating.

It should form part of the initial business model, financial planning and operating structure.

The same applies to e-invoicing.

Saudi Arabia's e-invoicing framework is being implemented in phases. Phase 1 requires taxpayers subject to the requirements to generate and store compliant electronic invoices, while Phase 2 involves integration with ZATCA's systems and is being implemented in waves.

For a new business, this means the finance function and technology environment should be designed with applicable compliance requirements in mind from the beginning.

Compliance Does Not End After Incorporation

A common misconception is that once a company is incorporated, the major regulatory work is complete.

In reality, businesses have continuing responsibilities.

Saudi Arabia has continued strengthening corporate transparency and beneficial ownership requirements. In December 2025, the Ministry of Commerce approved updated Beneficial Ownership Rules requiring companies to identify and maintain information concerning their ultimate beneficial owners, subject to the applicable requirements.

The Ministry of Commerce has also introduced annual confirmation of commercial-registration data as an ongoing service.

These developments reinforce an important principle:

Build the Finance Function Around the Business

A new business may not need a large finance department on day one.

But it does need reliable financial information.

Management should be able to answer questions such as:

• How much cash do we have?
• How much cash are we consuming each month?
• What is our break-even point?
• Which products or services are most profitable?
• Are our margins developing as expected?
• Are customers paying on time?
• What are our major cost drivers?
• How much working capital do we need?
• Are our tax and compliance obligations being managed?
• Can management rely on the financial reports?

As the business grows, its finance requirements will naturally evolve.

Basic bookkeeping may eventually need to develop into:

The objective should therefore not simply be to keep the books.

It should be to build a finance function that helps management understand and grow the business.

Don't Underestimate Branding and Business Development

Commercial success in a new market is not determined by financial projections alone.

A new entrant also needs to establish credibility.

Customers and business partners want to know:

• Who are you?
• What experience do you bring?
• Why should we trust you?
• What makes you different?
• Why should we choose you over an established competitor?

For international businesses entering Saudi Arabia, building a local network and market presence can therefore be just as important as establishing the legal entity.

The initial phase may require significant investment in:

• Relationship building
• Business development
• Marketing
• Networking
• Customer acquisition
• Local partnerships
• Brand positioning

The feasibility model should take these activities into account.

A business should have sufficient financial capacity to survive the initial market-building phase rather than expecting immediate profitability.

Think About Growth Before You Start

Another important question is:

Will it remain a small specialist business?

Will it expand across Saudi Arabia?

Will it serve customers across the GCC?

Will it require additional employees?

Will it need external financing?

Will it add new products or services?

Will it need a larger finance function?

Will management eventually require a CFO, internal audit or financial advisory support?

These questions matter because the systems and processes established at the beginning should ideally be capable of supporting the direction in which the business intends to grow.

Saudi Arabia Offers Opportunity—But Preparation Matters

There is a strong case for businesses to explore Saudi Arabia.

The Kingdom's economic transformation, investment initiatives, infrastructure development and expanding private sector are creating opportunities across numerous industries.

The investment framework has also evolved considerably, with the updated Investment Law designed to support investment, economic diversification and private-sector participation.

But opportunity should not be confused with guaranteed success.

A stronger approach is to:

This approach does not eliminate risk.

It helps businesses understand and manage risk before committing significant resources.

How MAC KSA Desk Can Support Your Business

At MAC KSA Desk, we look at Saudi market entry from an end-to-end perspective.

Our role is not limited to helping a business establish its presence.

We can support businesses before entering the market, during establishment, throughout operations and as they grow.

Before Market Entry

• Market and business feasibility studies
• Business plans
• Financial modelling
• Investment analysis
• Break-even analysis
• Scenario and sensitivity analysis
• Plan A, B and C development
• Market-entry advisory

Business Setup and Initial Finance Function

• Business setup and structuring support
• Accounting and finance setup
• Tax and compliance considerations
• Finance process design
• Accounting systems and controls
• Initial reporting framework

Ongoing Accounting, Tax and Compliance

• Bookkeeping and accounting
• Financial reporting
• Management reporting
• VAT and ZATCA-related support
• Tax advisory
• E-invoicing support
• IFRS and technical accounting
• Compliance support
• Internal audit and risk advisory

Finance and Business Growth

• Budgeting and forecasting
• Financial modelling
• Fractional CFO / Virtual CFO support
• Business performance analysis
• Due diligence
• Business valuation
• Finance function improvement
• Strategic financial advisory
• Back-office accounting support

This enables businesses to access feasibility, accounting, tax, audit and advisory capabilities under one roof.

More importantly, our relationship does not have to end once the business is established.

As the business grows, its financial, reporting, tax, compliance and strategic requirements grow with it.

The Better Question

If you are considering setting up a business in Saudi Arabia, perhaps the first question should not be:

It should be:

Once the business case is clear, the appropriate structure can be considered.

Once the structure is established, the right finance and compliance framework can be built.

And as the business grows, its financial function can evolve with it.

MAC KSA Desk

Supporting businesses with feasibility studies, market-entry advisory, business setup support, accounting, taxation, audit, financial advisory, back-office accounting and end-to-end finance support.

About Muhammad Abbas & Co. Chartered Accountants

Muhammad Abbas & Co. Chartered Accountants is a partner-led professional services firm providing Finance, Tax and Advisory solutions to businesses across multiple industries.

Our services include:

• Virtual CFO & Finance Advisory
• Tax Advisory & Compliance
• Audit & Assurance
• Accounting & Outsourced Finance
• IFRS Advisory
• Corporate Governance & Internal Controls
• Business Advisory
• Transaction & Due Diligence Support

We believe that finance should serve one purpose: better decision-making.

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