Saudi-Arabien Wirtschaftshandbuch Saudi Arabia Business ... - Ghorfa

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panies that are completely owned by foreign capital and
companies with a foreign capital majority are possible.
the investment incentives
The investment law and other regulations offer a number
of different investment incentives:
– A uniform tax rate of 20% on profits on the foreign
capital percentage.
– A licensed project may purchase real estate for
production plants and for staff accommodation.
– A loss carry-forward is possible for an unrestricted
period of time.
– The free transfer of capital and its revenue, e.g. generated
by the sale of an investment or part of the capital,
by liquidation or generated profits, is guaranteed.
– The licensed legal person is also the sponsor for the
foreign investor and the foreign staff of the licensed
project.
– Exemptions from customs for the import of raw materials
and machines that are required in the production
plant for newly formed facilities or expansions.
– Land will be granted for inexpensive, long-term
leasing.
– Guarantees against dispossession or nationalisation
will be given based on international standards, as
commonly agreed in bilateral investment agreements
(e.g. in the German-Saudi Agreement about the
Promotion and Mutual Protection of Capital Assets
dated 29th October 1996, that came into effect on
08.01.1999).
– A so-called soft loan by the Saudi Industrial
Development Fund (SIDF), i.e. a loan to favourable
conditions, is available for every project. This applies
regardless of whether or not a Saudi partner is
involved. Up to 50% of the investment volume can be
financed in this way.
the SIdf loans
The Saudi Industrial Investment Fund supplies loans at
favourable terms for financing up to 50% of the investment
volume of licensed industrial projects. The financing
costs total a maximum annual 2% of the loan value as a
handling charge.
The loan is paid out according to the progress of the
project. It must be repaid within a maximum of 15 years.
Usually, the repayment term is shorter. This is the object
of the negotiations with the SIDF and is recorded in the
loan agreement that is concluded between the investor and
SIDF. Mortgages and other guarantees provided by the
project or the partners serve as security.
the project financing
Usually, the registered capital that needs to be paid when
founding a company equates to 25% of the total investment
capital. This especially refers to the Saudi limited
company law. This sum needs to be financed by the partners
themselves. A further 50% of the investment capital
can be financed by the SIDF as a loan. The remaining 25%
can then be financed by loans from commercial banks.
Lenders may be either Saudi or foreign banks. However
this is only possible for foreign banks, if they do not own
any stakes in Saudi joint-venture banks as in this case, the
loan is subject to tax by the Saudi tax authorities.
required documents
The following documents are needed to apply for a licence
from the SAGIA:
– The properly completed and signed application forms
that contain information about the planned project.
This includes the object of the project, transferred
technology, capital and a schedule for realising the
project. Also for industrial projects: the products that
are to be manufactured, the required raw materials
and machines, probable energy consumption and any
environmentally-friendly technology that will be used.
– A letter from the Saudi sponsor (if applicable) in
which the sponsor confirms his sponsorship of the
foreign investor.
– A personal authorization for the person managing the
licensing procedure.
– In reference to companies – a correctly drafted
resolution of the responsible organisation of the com-
pany that contains the foundation of the project in the
appropriate legal form.
– In reference to companies – if applicable, a correctly
legalised copy of the commercial register entry.
– In reference to companies – the articles of the company
in a correct legalised form.
– Proof of the financial stability of the investor
– In reference to individuals – copies of relevant ID
documents (passport, residential permit) and
academic or professional certificates and references as
legalised copies.
– In reference to dependent branch offices – a declaration
of commitment by the parent company to assume full
responsibility for all of the branch office’s obligations
in so far as these legally exist.