Foreign Investment Law in Saudi Arabia

The Foreign Investment Law in the Kingdom of Saudi Arabia is a set of rules regulating foreign investments in the Kingdom. It outlines the conditions, procedures, privileges, and guarantees for foreign investors. Issued by Royal Decree on April 10, 2000, the law comprises eighteen articles, with several amendments made over time.

Article One of the Foreign Investment Law defines the foreign investor as a natural person who is not of Saudi nationality or a corporate person whose partners are not all Saudi. It also defines foreign investment as the investment of foreign capital in an activity licensed by this law. For purposes of this law, foreign capital means, for example but not limited to, the following assets and rights so long as they are owned by a foreign investor: Cash, securities, and negotiable instruments; foreign investment profits, if invested to increase capital, expand existing projects, or establish new ones; machinery, equipment, furnishings, spare-parts, means of transportation and production requirements related to the investment; intangible rights, such as licenses, intellectual property rights, technical know-how, administrative skills, and production techniques.

As per Article Two of the Foreign Investment Law, the Ministry of Investment issues a license for foreign capital investment in any investment activity in the Kingdom, whether permanent or temporary. The ministry must decide on the investment’s application within thirty days of the submission of all documents required by this law's Implementing Regulations. If the specified period elapses without the ministry deciding the application, it must issue the required license to the investor. If the authority rejects the application within the prescribed period, the decision must be reasoned, and the party whose application has been rejected has the right to appeal such decision according to laws.

The foreign investor may obtain more than one license for different activities, and the Implementing Regulations specify the necessary requirements. A project licensed under this law enjoys all the privileges, incentives, and guarantees extended to a national project, in accordance with laws and directives.

The Council of Ministers has the power to issue a list of activities excluded from foreign investment. According to Article Five, foreign investment licensed under the provisions of this law may be either of the following forms: Firms jointly owned by a national and foreign investor, or firms wholly owned by a foreign investor. The legal status of the firm is determined in accordance with laws and directives.

Article Seven of the Foreign Investment Law stipulates that a foreign investor may repatriate its share from the sale of equity, liquidation surplus, or profits generated by the firm, or dispose of the same in any other lawful manner. The foreign investor may also transfer the amounts required to settle any contractual obligations related to the project.

According to Article Eight, a foreign firm licensed under this law may acquire necessary real estate as needed for operating the licensed activity, or for housing all or some of its staff, subject to the provisions governing real estate ownership by non-Saudis.

The foreign investor and its non-Saudi staff are sponsored by the licensed firm. The Ministry of Investment makes available to all interested investors the required information, clarifications, and statistics, provides them with all services, and carries out all procedures to facilitate and complete all investment-related transactions. The foreign investor’s investments may not be confiscated, wholly or partially without a judicial ruling. Moreover, they may not be subject to expropriation, wholly or partially, except for public interest, against a fair compensation according to laws and directives.

The Ministry of Investment notifies the foreign investor in writing of any violation of the provisions of this law and its regulations, in order to rectify such violation within the period of time the ministry deems appropriate for the rectification of the violation. Without prejudice to any harsher penalty, the foreign investor is subject to any of the following penalties if the violation persists: Withholding all or some of the incentives and privileges given to the foreign investor; imposing a fine not exceeding SAR500,000; or revoking the foreign investment license. Said penalties are imposed pursuant to a resolution by the Minister of Investment. The resolution issued may be appealed before the Board of Grievances under its law.

Without prejudice to agreements to which the Kingdom is party, disputes arising between the government and the foreign investor in relation to its investments licensed in accordance with this law are, as possible, settled amicably. Failing such settlement, the dispute is settled according to the relevant laws.

All foreign investments licensed under this law are treated in accordance with applicable tax provisions and amendments in the Kingdom. The foreign investor must comply with all laws, regulations, and directives in force in the Kingdom, as well as international agreements to which the Kingdom is party.