New Saudi investment law
In August 2024, the Saudi Government announced a new investment law to replace the previous Saudi Investment Law of 2000 to further liberalize the country’s regulatory landscape. The updated investment law has now come into force in February 2025. With the new Law, doing business in Saudi Arabia will be more straightforward and open to all.
This Law aims to develop and enhance the competitiveness of the investment environment in the Kingdom, contribute to economic development, and create job opportunities by providing an attractive investment climate per relevant laws. The Vision 2030 initiative of Saudi Arabia liberalized the rules and regulations regarding investment by foreigners and locals, enabling Saudi Arabia to transform itself into a global hotspot for foreign investment. The country offered 100% ownership rights for foreigners, tax breaks, custom duty exemptions, and streamlined licensing processes.
Key Changes of Saudi 2025 Investment Law
As per the new investment rules under the 2025 Investment law, several of the present stipulations regarding investment stand further liberalized to attract more foreign investment.
- Replacement of MISA license: For a foreign company to operate in Saudi Arabia, obtaining a MISA (Ministry of Investment Saudi Arabia) license is necessary. Under the New Saudi Investment Law, the investors must only register with the Ministry of Investment to streamline the process.
- Applicability extended: The new Law applies to both foreign and domestic investors, whether natural or legal persons, including those operating in special economic zones.
- Protection of Investors’ Rights: The new Law guarantees protection from expropriation, fair treatment, freedom to manage investments, and the ability to transfer funds. The Law ensures that assets cannot be confiscated or expropriated without legal procedures and fair compensation.
- Freedom to invest expanded: Foreign investors can now invest in most sectors with 100% ownership, except for excluded activities. MISA reserves the right to suspend investments for national security reasons. Investors can, however, seek approval for investment under the excluded activities.
- Investment Incentives made more transparent: A Framework for granting investment incentives based on transparent and objective eligibility criteria has been introduced.
- New Alternative Dispute Resolution: Disputes can now be resolved through alternative methods such as arbitration and mediation while retaining the right to pursue cases through competent courts.
- New penalties: The Law categorizes violations as either material or non-material. The investors are required to correct non-material breaches within a set time frame. Failing to do so or committing material violations can lead to penalties, including fines or license revocation. The investors may, however, appeal the MISA decision within 30 days.
What are the benefits of the Updated Investment Law?
The new investment law was drawn up after extensive study of investment regimes in other countries. It is designed to make Saudi Arabia a more attractive destination for many potential investors. The key benefits are,
- Ensures equality between investors
An essential aspect of the updated Investment Law is that it applies equally to foreign and domestic investors. This safeguards against expropriation and protects intellectual property. These protections are also available to investors in the country’s various Special Economic Zones (SEZS). - Streamlined registration processes
Replacing the existing MISA license with an updated system to get regulatory approval under the new Law is expected to speed up investment in all sectors. - Improves remittance rights
The new Law will make it easier for investors to repatriate their returns by enshrining the principle of equality between different types of investors. - Opens up new sectors for investment
The Saudi investment law will continue the principle that some strategic sectors are not open to foreign investment. These prohibited sectors are codified in the ‘Negative List’ and have steadily whittled down in recent years.
The Negative List currently rules out foreign investment in sectors relating to exploration and production of petroleum substances, manufacturing of military equipment, security and detective services, real estate investment in Mecca and Medina, recruitment, tourist services for Hajj and Umrah, midwifery and quasi doctoral services and fisheries.
With the new updated investment law, Saudi Arabia is looking for more excellent foreign investment, which will diversify its economy.
How the Helpline Group in Saudi Arabia can help?
Helpline Group, backed by a strong and experienced team, brings over 25 years of expertise in company formation in Saudi Arabia, offering a seamless, hassle-free experience for clients, including foreigners.
Our seasoned professionals possess in-depth knowledge of the new investment rules and regulations, ensuring compliance and efficiency. The Helpline Group will assist you in leveraging the beneficial changes brought about by the new Saudi Investment law to start your business in Saudi Arabia hassle-free.
