Saudi Arabia Unveils New Business Registration and Trade Name Laws
Saudi Arabia has introduced new legislation aimed at simplifying the commercial registration and trade name processes, described as a transformative step for entrepreneurs. These laws, approved recently, are poised to boost business efficiency and enhance the commercial climate.
Experts highlight that these regulations will particularly benefit small businesses, including those led by women, aligning with the Kingdom’s Vision 2030 for economic diversification. In early 2024, there was a significant rise in business registrations, with 104,000 new entries, showing a 59% increase from the previous year.
Minister of Commerce Majid bin Abdullah Al-Qasabi emphasized that the changes aim to simplify business operations through a unified national registration system. Ryan Al-Nesayan from Arthur D. Little praised the new laws as eliminating bureaucratic delays, allowing startups to focus on growth rather than paperwork.
Women secured 44% of the new business registrations in early 2024, highlighting increased female entrepreneurial involvement. Al-Nesayan noted this as a sign of reduced barriers for female entrepreneurs, fostering gender inclusivity in economic development.
The new regulations, replacing older laws from 1995 and 1999, are expected to take effect soon. They align with broader legal reforms, including the new Investment Law and amendments to the Labor Law, supporting foreign investment and Vision 2030 goals.
Attorney Jihad Chidiac explained that the new Trade Names Law enhances intellectual property protection, simplifying the process for reserving and transferring trade names. It also prohibits registration of similar names across different business activities, promoting fair competition.
Chidiac emphasized that a centralized electronic database will improve transparency and uniformity, reducing duplication and conflicts. The legal system supports alternative dispute resolution, easing court burdens and offering flexible options for businesses.
The new registration system, based on international best practices, is expected to attract foreign investors by providing a streamlined, one-stop platform for all business-related registrations.
Additionally, the cabinet has approved a new real estate transaction tax system, replacing a 15% VAT with a 5% tax on property transfers, exempting certain transactions. This reform aims to alleviate financial burdens and stimulate investment in the real estate sector.
Legal counsel will be crucial in navigating these transitions, particularly regarding the five-year grace period for existing registrations. Businesses are advised to seek professional guidance to adapt to these changes and maintain a competitive edge.