Many international businesses decide to enter Saudi Arabia, then start with the most expensive step: a legal entity, an office and a local hire. Twelve months later they have costs, a team and very little pipeline. There is a better order of doing things.
Why Saudi Arabia, and why now
The economy grew 4.5% in 2025, with non oil activities growing 4.9%, according to the General Authority for Statistics.[1] Large programmes across technology, data, infrastructure and services are creating demand for international suppliers. The opportunity is real. So is the competition, and buyers can tell the difference between a supplier who is committed to the market and one who is visiting.
First, decide who you are selling to
This one question shapes everything else.
- Government and government owned buyers. Since 1 January 2024, Saudi government entities have been restricted from contracting with foreign companies that do not have a regional headquarters in the Kingdom.[2] If your main buyers are government, a local presence is likely to be part of the plan sooner. In return, qualifying regional headquarters receive a 0% corporate income tax and withholding tax rate for 30 years on qualifying activities.[2]
- Private sector buyers. Here you usually have more room to test the market first, through direct selling, partners or a distributor, before committing to a legal entity.
A practical route in, before the office
- Pick one segment and one offer. Do not launch everything. Choose the buyers where your product has the clearest proof and the shortest path to a first deal.
- Build a target list of named accounts. Twenty to thirty organisations, with the decision makers mapped, is enough to learn fast.
- Get in front of buyers in person. Relationships matter. Plan focused trips around meetings that are already booked, and around the major regional events.
- Use a local partner where it helps. If you appoint a commercial agent or distributor, note that only Saudi nationals and wholly Saudi owned companies can act in that role, and agreements are recorded in the Ministry of Commerce Commercial Agencies Register, generally within three months.[3] Agree the terms for ending the relationship before you start.
- Win the first customers, then set up. Once you have real pipeline and a few reference customers, the case for an entity, an office and local hires makes itself, and you know exactly what to hire for.
Mistakes we see most often
- Hiring a country manager first. Without pipeline or a clear offer, a senior hire spends their first year building what should have been tested beforehand.
- Treating the Gulf as one market. Saudi Arabia and the UAE buy differently. Run them as separate plans.
- Visiting, not committing. Occasional trips with no follow up signal a supplier who will not be around when things go wrong.
- Leaving legal and tax to the end. Licensing, contracts and tax affect pricing and margins. Take local advice early.
This article is practical guidance, not legal or tax advice. Rules change, so take advice from qualified Saudi counsel before appointing a partner or setting up an entity.
Our Local Market Entry, Middle East service does this with you: we test the market, open doors and help win your first customers before you commit to an office or local hires.
Questions we are asked
Do I need a company in Saudi Arabia to sell there?
Not always on day one. Many international businesses test the private sector market through direct selling, partners or a distributor first. If your main buyers are government entities, a regional headquarters in the Kingdom is likely to be needed, as restrictions on contracting apply from 1 January 2024.
Who can be a commercial agent or distributor in Saudi Arabia?
Only Saudi nationals and wholly Saudi owned companies. Agreements are recorded in the Ministry of Commerce Commercial Agencies Register, generally within three months of taking effect.
What incentives are there for a regional headquarters in Saudi Arabia?
Qualifying regional headquarters receive a 0% corporate income tax and withholding tax rate for 30 years on qualifying activities.