Foreign Investment Policy
& TRADE FINANCE FACILITIES
Riyadh – Saudi Arabia.
The following expressions and terms shall have the meaning ascribed beside each,
unless the context deems otherwise:
A. THE COUNCIL: The Supreme Economic Council.
B. BOARD OF DIRECTORS: The Board of Directors of the General
C. THE AUTHORITY: The General Investment Authority.
D. THE GOVERNOR: The Governor of the General Investment Authority and Chairman
of the Board of Directors.
E. FOREIGN INVESTOR: The natural person of non-Saudi nationality or otherwise
the corporate body, where all partners are non-Saudi nationals.
F. FOREIGN INVESTMENT: Investment of Foreign Capital in a licensed activity
under this Act.
G. FOREIGN CAPITAL: Foreign capital refers to, but is not limited to, the
following funds and rights as long as they are possessed by a Foreign Investor:
1. Money, instruments, securities and commercial instruments.
2. Foreign Investment profits if they are invested as capital to expand existing
projects, or establish new projects.
3. Machinery, equipment, supplies, spare-parts, means of transportation and
production requirements relevant to the investment.
4. Legal fights i.e., licenses, intellectual properties, technical know-how,
administrative skills and production techniques.
H. PRODUCTION FACILITIES: Projects for the production of industrial and
agricultural products (plant and animal).
I. SERVICE FACILITIES: Service and construction projects.
J. ACT: The Foreign Investment Act.
K. THE RULES: The Rules of Implementation of this Act.
The Authority shall issue a license for a Foreign Capital Investment in any
investment activity in the Kingdom, whether permanent or temporary, without
prejudice to the requirements of regulations and agreements.
The Authority shall make a decision about the investment application within
thirty days after the completion of documents provided for in the Rules. In the
event that the specified period elapsed without the Authority rendering a
decision about the application it shall be obligated to issue the required
license for the investor.
If the Authority shall deny the said application within the specified period,
then the pertinent decision of denial shall be justified, and the party against
whom the decision of denial had been issued shall have the right to contest such
decision according to regulations.
The Council shall have the authority to issue a list of activities excluded from
Subject to Article 2, the Foreign Investor may obtain more than one license in
different activities, and the Rules shall specify the necessary measures.
Foreign Investments licensed under the provisions of this Act, may be in either
of the following forms:
1. Facilities owned by a national and a Foreign Investor.
2. Facilities wholly owned by a Foreign Investor.
The legal form of the Facility shall be determined according to regulations and
A project licensed under this Act shall enjoy all the benefits, incentives and
guarantees enjoyed by a national project according to regulations and
The Foreign Investor shall have the right to reallocate his share as derived
from the selling of his equity, or from the liquidation surplus or profits
generated by the facility, out of the Kingdom or to use by any other legal
means. He shall also be entitled to transfer the required amounts to settle any
contractual obligations pertaining to the project.
The foreign facility licensed under this Act shall be entitled to possess the
required real estate as might be reasonable for practicing the licensed
activity, or for the housing of all or some of the staff as per the provisions
for non-Saudi nationals real estate acquisition.
The Foreign Investor and his non-Saudi staff shall be sponsored by the licensed
The Authority shall provide all those interested in investment with all
necessary information, clarifications and statistics, together with all services
and procedures to facilitate and accomplish all matters pertaining to the
Investments related to the foreign investor shall not be confiscated wholly or
partially without a court order. Moreover, it may not be subject to
expropriation wholly or partially except for public interest against an
equitable compensation according to Regulations and Directives.
1. The Authority shall inform the Foreign Investor in writing when violating the
provisions of this Act and its Rules in order that such violation may be
rectified within a period of time determined appropriate by the Authority for
rectifying such violation.
2. Without prejudice to any greater penalty, the Foreign Investor under the
existence of the violation shall be subject to any of the following penalties:
A. Withhold all or part of the incentives and benefits allocated for the Foreign
B. Imposition of a financial fine not exceeding SR. 500,000 (Five hundred
thousand Saudi Riyals).
C. Cancellation of the Foreign Investment license.
3. The imposition of the penalties referred to in paragraph (2) herein above, is
rendered by a resolution by the Board of Directors.
4. A petition against the penalizing resolution may be brought before the Board
of Grievances according to its regulations.
Without prejudice to the Agreements in which the Kingdom of Saudi Arabia shall
be a party of:
Disputes arising between the Government and the Foreign Investor relating to his
licensed investments under this Act shall as far as possible be settled
amicably, and if this shall prove to be impossible, then the dispute shall be
settled according to regulations.
The disputes arising between the Foreign Investor and his Saudi partners
relating to his licensed investments under this Act shall as far as possible be
settled amicably, and if this shall prove to be impossible, then the dispute
shall be settled according to regulations.
All Foreign Investments licensed under this Act shall be treated in accordance
with the Tax codes valid in Saudi Arabia and its amendments.
The Foreign Investor must abide by all regulations, rules and directives valid
in Saudi Arabia together with international agreements in which it is a part
The implementation of this Act shall not prejudice the vested interests of
Foreign Investments that legally existed before this Act shall come into force;
however, these projects in conducting their activity or increasing their capital
shall be subject to its provisions.
The Authority shall issue the Rules, which shall be published in the Official
Journal, and shall be effective as of the date of its publishing.
This Act shall be published in the Official Journal, and shall be effective
thirty days after its publishing, and shall invalidate the Foreign Capital
Investment Act issued by the Royal Decree no. (M/4), dated 2/2/1399 (H),
together with any contradicting provisions.
Intellectual Property Rights
Saudi Arabia is presently on the Intellectual
Property Rights (IPR) "watch list" under the Special 301 provisions of the 1988
Trade Act. It has experienced problems with illegally copied video tapes, audio cassettes,
and computer software. Saudi Arabia has not joined the
Patents: The Patent Law of 1989 regulates the issuance of patents in Saudi
Arabia. The criteria used to determine whether an invention is patentable
are similar to those applied under U.S. law. However, Saudi patent law
authorizes the administering agency to declare unilaterally that specific areas of
technology are unpatentable, effectively denying foreign patent holders the right to
enforce their subject patents in the Kingdom. In addition, the law permits compulsory
licensing of patented products and processes (with or without compensation) where (i) the
patent holder does not make use of the invention in Saudi Arabia
within a specified period of time, or (ii) the government decides to issue such licenses
for reasons of public policy.
Applications for Saudi patents may only be submitted by Saudi
nationals, although non-residents may hold the actual patent. The holder of the patent
must make use of the patent within two years of its issuance, or the patent can be voided.
Trademarks: Trademarks are registered through the Ministry of Commerce. If the owner of
the trademark lives in Saudi Arabia, the owner may
register the trademark directly. If the owner does not reside in the country, the
application must be filed by a Saudi resident. The trademark must be used
within the first two years after it is registered in order to receive the full 10-year
protection. Trademarks are renewable for additional 10-year terms.
Copyrights: Saudi copyright law protects all literary, scientific, and
artistic works published, acted, or shown for the first time in Saudi Arabia.
This means that Saudi copyright law does not protect foreign works first
published outside of the Kingdom. Copyrights will be granted for the lifetime of the
author plus 50 years, except for sound recordings and audio-visual works which will be
protected for 25 years from the date of first publication.