Saudi Finance

Requirements for Opening a Business Bank Account in Saudi Arabia

The following outlines the regulatory and procedural requirements for opening a corporate bank account in the Kingdom of Saudi Arabia (KSA). These regulations are overseen by the Saudi Central Bank (SAMA) and apply to both locally owned and foreign-owned entities.

1. Eligibility Criteria

Banks in Saudi Arabia classify applicants into distinct categories. The eligibility requirements vary based on the legal structure of the entity.

Locally Owned Companies: Establishments with 100% Saudi ownership or GCC ownership must possess a valid Commercial Registration (CR) issued by the Ministry of Commerce (MoC).

Foreign-Owned & Mixed Entities: Companies with any non-GCC foreign ownership must hold a foreign investment license issued by the Ministry of Investment of Saudi Arabia (MISA), in addition to the Commercial Registration.

Authorized Signatories: The account signatories must be legally authorized residents of Saudi Arabia. They must hold a valid Iqama (residency permit) if they are non-GCC nationals.

2. Required Documentation

The documentation process is stringent to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.

Standard Documents (All Entities)

Commercial Registration (CR): A valid copy of the CR certificate.

Articles of Association (AoA): The notarized AoA (and Memorandum of Association, if applicable).

National Address Proof: An official "National Address" registration certificate for the company premises.

Signatory Identification: Valid Saudi National ID (for Saudis) or Iqama (for expatriates) for all authorized signatories.

Board Resolution: A formal resolution from the Board of Directors authorizing the opening of the account and designating the signatories.

Tax Registration: VAT registration certificate or Tax Identification Number (TIN) from the Zakat, Tax and Customs Authority (ZATCA).

Additional Documents for Foreign-Owned Entities

MISA License: A valid foreign investment license from the Ministry of Investment.

Parent Company Documents: Attested copies of the parent company’s Certificate of Incorporation and Articles of Association (often required to be attested by the Saudi Embassy in the country of origin).

Beneficial Ownership Structure: Detailed documentation disclosing the Ultimate Beneficial Owners (UBOs) of the company.

3. Minimum Balance and Financial Requirements

Financial requirements differ between standard corporate current accounts and premium "enterprise" accounts.

Cost of Accounting Services for Small Businesses in Saudi Arabia

For small businesses in Saudi Arabia, accounting costs vary significantly based on the service model chosen—ranging from automated digital platforms to full-service professional firms. The Saudi Organization for Chartered and Professional Accountants (SOCPA) and the Zakat, Tax and Customs Authority (ZATCA) set strict compliance standards, meaning professional oversight is often a necessity rather than a luxury.

The following sections break down the market rates for different accounting solutions.

1. Outsourced Monthly Retainer Models

Most small businesses opt for an outsourced retainer, where a third-party firm handles the books for a fixed monthly fee. This is the most common model for SMEs.

Digital/Cloud Accounting Platforms:

Cost: SAR 200 – SAR 600 per month.

Scope: These are tech-first solutions (like Qoyod, Wafeq, or Zoho Books localized for KSA). The fee typically covers the software subscription and basic automated bookkeeping. You often have to enter the data yourself, with minimal human review.

Local Accounting Firms (SME Focus):

Cost: SAR 1,500 – SAR 3,500 per month.

Scope: Includes a dedicated accountant who manages your entries, reconciles bank statements, files VAT returns quarterly, and ensures Zakat compliance. This tier usually limits the volume of transactions (e.g., up to 100 invoices/month).

Mid-Tier Professional Firms:

Cost: SAR 4,000 – SAR 8,000+ per month.

Scope: Designed for growing businesses with higher complexity. Services include detailed management reporting, payroll processing, inventory management support, and advisory services.

2. Project-Based and One-Time Fees

Certain accounting requirements are not covered in monthly retainers and are billed separately as annual or one-off projects.

Annual Financial Audit:

Cost: SAR 10,000 – SAR 25,000 per year (for small entities).

Details: All foreign-owned companies and certain Saudi entities must submit audited financial statements to the Ministry of Commerce (Qawaem program). The fee depends on turnover and balance sheet complexity.

VAT Return Filing (Ad-Hoc):

Cost: SAR 500 – SAR 1,500 per filing.

Details: If you do not have a monthly retainer, firms charge per quarter to review your data and submit the VAT return to ZATCA.

Zakat & CIT Filing:

Cost: SAR 2,000 – SAR 5,000 per year.

Details: Preparation and submission of the annual Zakat and Corporate Income Tax (CIT) declaration.

E-Invoicing Setup:

Cost: SAR 1,000 – SAR 5,000 (One-time).

Details: Configuration of compliant invoicing software to link with ZATCA’s Fatoora portal (Phase 1 and Phase 2 compliance).

3. In-House Accountant Costs

Hiring a full-time accountant is generally more expensive than outsourcing but offers immediate access to financial data.

Junior Accountant (Expat):

Salary: SAR 3,500 – SAR 6,000 per month.

Hidden Costs: Visa fees, health insurance, annual ticket, and end-of-service benefits.

Senior Accountant (Saudi National):

Salary: SAR 6,000 – SAR 10,000+ per month.

Benefits: Helps with Saudization (Nitaqat) ratings but requires a higher salary baseline.

Chief Accountant / Finance Manager:

Salary: SAR 15,000+ per month.

Role: Strategic planning and team management, usually unnecessary for micro-businesses.

Factors Affecting the Fees

Quotes from accounting firms are rarely fixed; they fluctuate based on the following variables:

Volume of Transactions: A business with 50 monthly invoices pays significantly less than a retail store with 1,000 daily transactions.

Revenue Size: Higher revenue often triggers higher audit and Zakat filing fees due to the increased risk and workload.

Inventory Complexity: Businesses with physical stock (retail/manufacturing) require more complex cost accounting than service-based businesses (consulting/agencies).

Entity Type: Foreign-owned companies (MISA licensed) have stricter reporting requirements (audit is mandatory) compared to simple Sole Proprietorships owned by Saudi nationals.

Software Status: If your books are currently messy or non-existent (backlog accounting), firms will charge a "cleanup fee" ranging from SAR 5,000 to SAR 20,000 to bring records up to date before starting a retainer.

Eligibility Requirements for Personal Loans in Saudi Arabia

In Saudi Arabia, personal loans (often referred to as "personal finance" or "tawarruq") are regulated by the Saudi Central Bank (SAMA). While individual banks set their own internal policies, most financial institutions adhere to a standard set of eligibility criteria for both Saudi nationals and expatriate residents.

The following sections outline the specific requirements applicants must meet to qualify for financing.

Age and Residency Status

Banks classify applicants into two primary categories: Saudi Nationals and Non-Saudi Residents (Expats). The age requirements differ slightly between these groups.

Saudi Nationals: The minimum age is typically 18 to 21 years old, depending on the bank.
Expatriates: The minimum age is generally higher, usually starting at 22 or 23 years old.
Maximum Age: For most employed applicants, the loan must be fully repaid before the borrower reaches the age of 60.
Retirees: Retired Saudi nationals may be eligible for financing up to the age of 70 or 75, provided they have a steady pension income.

Salary Requirements

Income thresholds are a primary determinant of eligibility. Banks require proof of a stable monthly income to ensure repayment capacity.

Saudi Nationals:
- Basic personal loans often require a minimum monthly salary of SAR 3,000 to SAR 4,000.
- Some premium banking tiers or specific loan products may require salaries starting from SAR 10,000.
Expatriates:
- The minimum salary requirement is higher, typically ranging from SAR 5,000 to SAR 7,000.
- Certain banks may require a minimum of SAR 10,000 for expats employed in non-government sectors.

Employment and Tenure

Lenders assess the stability of the applicant's job and the reputation of their employer.

Approved Employer List: Most banks maintain a list of "approved employers." This includes government bodies, semi-government entities, and large private corporations. Applicants working for companies not on this list may face stricter requirements or higher interest rates.
Length of Service:
- Saudi Nationals: Typically require 1 to 3 months of continuous service with their current employer. Government employees may sometimes qualify immediately upon employment.
- Expatriates: Generally require 12 months of service. However, some banks may accept applicants with as little as 3 months of tenure if they work for a government entity or a major multinational corporation.
Salary Transfer: The majority of personal loans require the applicant to transfer their monthly salary directly to the lending bank. Loans without salary transfer exist but come with higher interest rates and stricter eligibility caps.

Creditworthiness and Debt Burden Ratio (DBR)

Financial behavior is tracked centrally to prevent over-indebtedness.

SIMAH Score: All banks check the applicant's credit history through the Saudi Credit Bureau (SIMAH). A low credit score due to late payments, defaulted bills (including telecom bills), or outstanding disputes will result in automatic disqualification.
Debt Burden Ratio (DBR): SAMA regulations cap the percentage of a borrower's salary that can go toward monthly debt repayments.
- Total monthly debt payments (including the new loan, credit cards, and car loans) generally cannot exceed 33% of the monthly salary for employees.
- For retirees, this limit is often set at 25%.
- If the borrower has a mortgage, the total DBR cap may increase to 45%.

Common Disqualifying Factors

Even if an applicant meets the age and income criteria, the following issues frequently lead to rejection:

High Existing Debt: If the applicant's current financial obligations already consume 33% of their income, they are ineligible for further financing.
Unapproved Employer: Working for a small start-up or a private entity that is not accredited by the bank can be a barrier.
Contract Duration: For expatriates, the loan tenure cannot exceed the validity of their residence permit (Iqama) or their employment contract. If the remaining time on the contract is short, the loan may be denied or the term drastically reduced.
Bounced Checks or Defaults: Any record of unpaid financial commitments or legal claims regarding finance will halt the application process.

Understanding Payment Gateway Fees in Saudi Arabia: A Merchant’s Guide

If you are running an e-commerce business in Saudi Arabia, your choice of payment gateway is one of the biggest factors affecting your profit margins. Because the Saudi Central Bank (SAMA) oversees the financial ecosystem, fees are structured specifically to favor the national payment scheme, mada, while maintaining standard international rates for credit cards.

Here is a breakdown of how these fees work, what they cost you, and when the money actually hits your bank account. 1. The Fee Structure: mada vs. Credit Cards In the Saudi market, you aren't charged a flat rate for every transaction. Instead, the cost depends on the "card brand" the customer uses. The formula is typically: (Percentage of Sale) + (Fixed Fee per Transaction). mada (The National Debit Card) mada is the most common payment method in the Kingdom. Since it is a local network, it is the most cost-effective for merchants. Transaction Fee: Usually ranges from 1.0% to 1.75%. Fixed Fee: Typically SAR 1.00 per transaction. The Benefit: mada transactions generally have higher conversion rates in Saudi Arabia and lower dispute (chargeback) risks. Visa & Mastercard (Credit Cards) When customers use credit cards, the fees jump because international banks and clearinghouses are involved. Transaction Fee: Usually between 2.2% and 2.9%. Fixed Fee: Typically SAR 1.00 per transaction. Foreign Card Surcharge: If a tourist or a customer with a non-Saudi bank account buys from you, gateways often add an extra 1% to 1.5% for cross-border processing. 2. Settlement Timelines: When do you get paid? Even though the customer's money is deducted instantly, it takes time to reach your business bank account. This is known as the "settlement period." mada Transactions: These are processed locally and are fast. You can expect the funds in 2 to 3 business days (T+2 or T+3). Credit Card Transactions: Because Visa and Mastercard require international clearing, these take longer, usually 3 to 5 business days. Digital Wallets (STC Pay / UrPay): Some gateways offer faster settlements for these wallets, sometimes within 24 hours. 3. Real-World Examples To see how these fees impact your bottom line, let’s look at two different sales scenarios: Scenario A: A SAR 200 purchase using mada Percentage Fee (1.0%): SAR 2.00 Fixed Fee: SAR 1.00 Total Fee: SAR 3.00 You receive: SAR 197.00 Scenario B: A SAR 200 purchase using Visa Percentage Fee (2.5%): SAR 5.00 Fixed Fee: SAR 1.00 Total Fee: SAR 6.00 You receive: SAR 194.00 4. Extra Costs to Watch Out For Beyond the per-transaction fee, keep an eye on these potential charges: Setup Fees: While many gateways (like Moyasar or PayTabs) often offer "SAR 0" setup during promotions, some still charge an initial integration fee of SAR 1,000 to SAR 2,000. Monthly Subscription: Some providers charge a "maintenance fee" (e.g., SAR 100/month) if your transaction volume is low. Refund Fees: If you refund a customer, the gateway usually keeps the fixed SAR 1.00 fee as a processing cost, even if they return the percentage fee.