Saudi Arabia's Investment Law: 100% foreign ownership and MISA registration explained

Saudi Arabia's investment framework has changed substantially, and the terminology hasn't quite caught up. If you've been researching how to set up operations in the Kingdom, you've almost certainly encountered references to a MISA licence in Saudi Arabia, only to discover that the process described no longer matches reality. The Foreign Investment Law of 2000, which created the original MISA licensing regime, was replaced by a new Investment Law issued by Royal Decree No. M/19 on 22 July 2024. That law took effect in February 2025, exactly 180 days after its publication on 11 August 2024. The old licence is gone. What replaced it is a registration system that is faster, broader in scope, and designed around a principle that would have been unthinkable a decade ago: foreign investors should be treated the same as Saudi ones. For business owners, CFOs, and deal sponsors evaluating Saudi market entry, understanding what actually changed, and what the process looks like now, is essential before committing capital or signing a lease. Here's how it works.

From MISA licence to registration: what changed

The Ministry of Investment of Saudi Arabia (MISA) used to issue foreign investment licences, a process that could stretch for weeks and involved sector-specific approvals before a company could even begin commercial registration. The new Investment Law, supported by Implementing Regulations approved through Ministerial Decision No. 1086 on 7 February 2025, scrapped that model entirely. Foreign investors now complete an Investment Registration, receiving an Investment Registration Certificate rather than a licence. A National Investor Register records all registered investors.

This isn't just a rebrand. The old system treated foreign investment as something requiring permission. The new system treats it as a right, subject to a defined set of exclusions. MISA's official review period is no more than 10 working days once all requirements are met, which is a meaningful improvement over the previous regime. A single registration can cover activities across multiple sectors, so you no longer need separate approvals if your business spans, say, professional services and technology. People still search for a MISA licence because the old terminology is embedded in years of advisory content, but the instrument you'll actually receive is a registration certificate.

Who needs to register, and what 100% ownership really means

Any foreign investor needs to register with MISA before making an investment in Saudi Arabia, whether through a wholly owned company or a joint venture with Saudi partners.

The headline change is that 100% foreign ownership is now the default for most activities. Under the old law, certain sectors required Saudi partners or imposed equity caps. The 2025 framework makes full foreign ownership the default, putting foreign investors on broadly equal footing with domestic ones. If you're setting up a consultancy, a tech company, a logistics operation, or a manufacturing facility, you can typically own the entire entity. There is no requirement to bring in a local sponsor or silent partner for the majority of commercial activities. This is a significant shift for business owners who previously structured around mandatory Saudi shareholding, and it simplifies both governance and profit repatriation. For a fuller walkthrough of entity formation options, Cosmos has published a detailed guide to setting up a business in Saudi Arabia.

The excluded activities list and exceptional approvals

Full foreign ownership doesn't mean every sector is open. An excluded-activities list restricts foreign investment in specific areas, including upstream oil and gas exploration and production, manufacture of military equipment, and private security services. Commercial agency activities remain reserved for Saudi-owned businesses. The list is maintained by MISA and should be checked at the time you plan your investment, not months before, because it can be updated.

If your intended activity falls on the excluded list, that isn't necessarily the end of the conversation. The Investment Law introduced a formal Exceptional Approvals mechanism. Investors can apply to MISA for permission to invest in an excluded activity, provided they can demonstrate that the investment meets economic-impact criteria. Examples might include technology transfer, significant job creation or alignment with Vision 2030 priorities. These approvals are discretionary, and there is no guarantee of success, but the pathway exists and is worth exploring if your business case is strong.

The registration process, step by step

The registration process is more straightforward than the old licensing regime, but it still requires preparation. Here's what the sequence looks like in practice:

• Pre-application planning: Confirm your intended activities are not on the excluded list. Decide on your entity structure (branch, LLC, or joint-stock company) and prepare your corporate documents, including articles of association, board resolutions authorising the Saudi investment, and financial statements.
• MISA portal submission: Create an account on the MISA investor portal and submit your application with all supporting documents. You'll need to specify your planned activities using the ISIC classification codes that correspond to your business.
• MISA review: Once MISA confirms your application is complete, the review period is no more than 10 working days. Incomplete submissions get sent back, which is the most common cause of delays.
• Investment Registration Certificate: On approval, you receive your certificate and are entered into the National Investor Register. This certificate is what you'll use for the next steps: commercial registration, bank account opening, and visa applications.

Working with an advisory partner like Cosmos can help ensure your documents are complete before submission, reducing the risk of rejection or delay. Cosmos coordinates with licensed local partners who handle the MISA portal filings and follow-up directly.

After registration: commercial registration, tax and ZATCA

Your Investment Registration Certificate is necessary but not sufficient. You still need to complete commercial registration with the Ministry of Commerce, obtain a municipal licence, and register with the Zakat, Tax and Customs Authority (ZATCA) for tax and VAT purposes.

The tax position for foreign-owned entities is distinct from Saudi-owned ones. Corporate income tax applies at 20% on the share of profits attributable to non-GCC foreign owners. For the share attributable to Saudi and GCC owners (relevant in joint ventures), Zakat applies at 2.5% instead. In mixed-ownership structures, the profit is split proportionally between the two regimes. VAT applies at 15% on most goods and services, regardless of ownership structure.

Getting this right from the start matters. Structuring your shareholding has direct tax consequences, and retroactive changes are expensive. Cosmos has a detailed breakdown of corporate tax and Zakat obligations that is worth reading before you finalise your ownership split. Registration with ZATCA should happen promptly after commercial registration; delays can trigger penalties even before you've generated revenue.

When the Regional Headquarters programme matters

If your business intends to bid on Saudi government contracts, the Regional Headquarters (RHQ) programme isn't optional: it's a prerequisite. Since 1 January 2024, government bodies generally cannot award contracts to foreign companies that lack a Saudi RHQ. There are narrow exemptions for contracts under SAR 1 million, situations where only one compliant bid exists, and bids that are at least 25% cheaper than the next best offer, but these are exceptions rather than the rule.

The RHQ programme offers a 30-year incentive of 0% corporate income tax and 0% withholding tax on eligible RHQ activities. The trade-off is substance requirements: at least 15 full-time employees, including three senior executives, must be in place during the first year. This is a genuine operational commitment, not a brass-plate arrangement. For multinational groups already planning to centralise regional functions in the Middle East, the economics are compelling. For smaller businesses with no government contracting ambitions, the programme may not be relevant, and forcing a fit would be a mistake. Cosmos has published a specific analysis of the RHQ programme's tax and contracting rules for those evaluating this option seriously.

Frequently asked questions

Is the old MISA licence still valid? All new investments go through the Investment Registration system introduced by the 2025 Investment Law. If you hold a licence issued under the old law, confirm your status under the new framework with MISA or your adviser rather than assuming the old terms still apply.

Can I own 100% of a Saudi company as a foreign investor? Yes, for most activities. Full foreign ownership is the default under the new law. The exceptions are activities on the excluded list, such as upstream oil and gas, military equipment manufacturing, private security, and commercial agency. Everything else is open to 100% foreign ownership without requiring a Saudi partner.

How long does the registration process take? MISA's stated review period is no more than 10 working days from the point your application is deemed complete. The total timeline, including document preparation, commercial registration, and ZATCA enrolment, typically runs longer. Incomplete applications are the main source of delays.

Do I need a physical office before registering? You do not need a physical office to submit your MISA registration application, but you will need a registered address for commercial registration and municipal licensing. RHQ participants face stricter substance requirements, including staffing minimums from year one.

What happens if my activity is on the excluded list? You can apply for an Exceptional Approval from MISA. These are assessed on a case-by-case basis against economic-impact criteria. There is no automatic right to approval, but the mechanism exists for investors who can demonstrate meaningful benefit to the Saudi economy.

The Saudi investment registration system is genuinely more accessible than what came before it. The shift from licensing to registration, combined with default 100% foreign ownership, removes friction that kept many international businesses on the sidelines. But "simpler" doesn't mean "simple": the interplay between MISA registration, commercial registration, ZATCA obligations, and potential RHQ requirements still demands careful planning. If you're evaluating Saudi market entry, start by mapping your activities against the excluded list, modelling your tax position based on your ownership structure, and deciding whether the RHQ programme aligns with your commercial strategy. Getting those three things right will save you months of rework later.

This is general information, not tax, legal or compliance advice. Rules change and depend on your circumstances; confirm your position with a qualified adviser in the relevant jurisdiction before acting.