Accountancy in Saudi Arabia

Country overview

The Kingdom of Saudi Arabia (“KSA”) was founded in 1932 and is a sovereign Arab state in Western Asia constituting the bulk of the Arabian Peninsula.

With a land area of approximately 2,150,000 square kilometres.

Saudi Arabia is geographically the fifth-largest state in Asia.

The population of the KSA is approximately 33 million people. The legal system of KSA is based on Shari ’a, Islamic law derived from the Quran and the Sunnah.

Arabic is the first language in the kingdom, English is widely spoken and used in business. Any correspondence with the government bodies should be in Arabic such as agreements and contracts.

Economic overview

The KSA is considered to be Middle East’s leading business centre because it has a very dynamic economy with consistent growth in all sectors, however, it is dependent oil revenues with about 75 – 85% of its revenues being derived from oil.

Saudi Arabia is desperate to diversify its economy away from oil. That’s why, last year, it launched a series of reforms and initiatives it dubbed the National Transformation Program 2020.

Just over a year after launching the plan, Saudi Arabia is going to redraft it by “stripping out some areas earmarked for change and extending the timeline of other targets,” as well as “change existing initiatives and add new ones,” according to the Financial Times (paywall). Apparently, the rethink is because Crown Prince Mohammed bin Salman’s plans were overly ambitious.

Sitting atop some 20% of the world’s petroleum reserves, the oil and gas sector accounts for nearly half of Saudi Arabia’s GDP. It is the country’s golden goose for exports, accounting for 85% of earnings, according to OPEC.

In 2014, when the price of energy decrease, uneven economy is dangerous, crude oil dropping from over $100 per barrel to nearly $50 today. This has blown a hole in Saudi’s budget, forcing it to burn through its reserves and borrow billions to finance its deficit. This year, Saudi Arabia’s GDP growth is set to be “close to zero,” according to the IMF. Meanwhile, renewable energy is steadily becoming more competitive with fossil fuels.

Transport infrastructure

Transport sector considers by the Kingdom as one of the solutions to supportable development and essential economic support that depends on the availability of infrastructure of road and multi means of transports.

The Kingdom’s national transport plan is consistent with the development strategy of the Ministry of Economy and Planning. It aims at developing the transport sector and harnessing its absorptive capacity to meet all the requirements needed.

The Ministry of Transportation completed the work on over 66,000 km and planned with international standards to get on to major cities, with the probability of expansion in the future to serve possible heavy traffic.

The Ministry of Transport focuses on plans for the improvement of public transport in the cities of the Kingdom to give comfort and welfare for the people.

Many studies and researches were conducted to find the best and advanced public transport systems around the world. The Council of Ministers supports the Ministry of Transport plans by issuing several decrees, like:

  • Implement the public transport project in Riyadh and high density of population cities.
  • Implement the public transport project in the city of Makkah (trains and buses).
  • Approve the public transport project in Jeddah province with all its components, and ratify the financial costs necessary for its implementation.

The kingdom also has a strong network of regional airports shown as follow:

Airports No.
International Airports 7
Regional Airports 5
Domestic Airports 14
Total 26

Business environment

The Kingdom established the Saudi Arabian General Investment Authority (“SAGA”) to assist foreign investors in the approval process for operating in KSA.

Obtain a licence and labour visas and conduct other business affairs under one Umbrella.

According to the World Bank, it takes just 18 days to set up a business in the KSA now it is easy to set up a new company with a number of incentives to attract investors to set business in KSA Such as:

  • No restrictions on repatriation of the capital.
  • Lower minimum capital requirements.
  • The 100% foreign ownership of property and companies in certain industries.

Latest version updated 10th April 2019

Country Breakdown

32.28

Million

Population

?

Saudi Riyal

Currency

$ 646.4

Billion

GDP

2.15

Million

km2