Doing Business in Saudi Arabia - International Franchise Association

and vegetable juices, mineral and ordinary water, long life milk, corn flakes, peas, beans,
peanut butter, yeast, and baking powder. The government will review the list in April 2011.
Confectionary products with cocoa and other bulk cocoa products are subject to a 15% tariff.
Nine types of fresh\chilled vegetables (tomatoes, onions, carrots, cucumbers, marrow, okra,
watermelons, melons and potatoes) are subject to a 25% tariff on a seasonal basis. Saudi
Arabia also imposes a 100% tariff on cigarette and other tobacco imports.
Trade Barriers Return to top
In 2005, Saudi Arabia became the 149 th country to join the World Trade Organization (WTO).
As part of WTO commitments, the country’s trade regime should become more transparent and
more accommodating to non-Saudi businesses.
As of the date of this report, Saudi business and laws still favor Saudi citizens, and Saudi Arabia
still has trade barriers, mainly regulatory and bureaucratic practices, which restrict the level of
trade and investment.
Nevertheless, the Government has liberalized the wholesale, retail, and franchise sectors,
allowing foreign investors to establish joint ventures and retain a 51% share. The foreign
partner’s capital requirement is set at $5.3 million (SR 20 million) and his equity share can be
increased to 75% after 3 years from the contract date. All industrial enterprises are open to
non-Saudis, and they can also trade in the products they manufacture. Restrictions on
individual professions also are in force, such as who can practice law, medicine, accounting and
financial services, architect and engineers, and other similar professions. A Saudi joint venture
partner is a requirement for any entity or individual to practice the above-mentioned professional
services.
Other trade barriers include:
• Commercial Disputes Settlement
There is not yet a transparent, comprehensive legal framework in place for resolving
commercial disputes. Saudi commercial law is still developing, but in 1994 the Saudis took
the positive step of joining the New York Convention of 1958 on the Recognition and
Enforcement of Foreign Arbitral Awards. Saudi Arabia is also a member of the International
Center for the Settlement of Investment Disputes (also known as the Washington
Convention). However, dispute settlement in Saudi Arabia continues to be time-consuming
and uncertain. Even after a decision is reached in a dispute, effective enforcement of the
judgment can still take years. Generally, the Board of Grievances has jurisdiction over
disputes with the government and over commercial disputes.
In October 2007, King Abdullah issued a royal decree to overhaul the Kingdom’s judicial
system, including allocating 7 billion SAR (approximately $1.9 billion) to train judges and
build new courts. The decree establishes two Supreme Courts, a general court and an
administrative court, and specialized labor and commercial tribunals - although
implementation has been slow. On February 4, 2009, the King reshuffled the Government
appointing a new Minister of Justice, a new President of the Grievance Board, and a new
Chairman of the Supreme Judicial Council. Industry sources expect the reshuffle to
expedite the overhaul of the Kingdom’s judicial system.