SAUDI ARABIA Law and Practice Contributed by: Zain Satardien, Chadi Hourani and Hayel Hourani, Hourani & Partners
1.2 Regulatory Framework for FDI Foreign direct investment (FDI) in Saudi Arabia is regu - lated primarily by the Ministry of Investment (MISA) under the new Investment Law, which has now fully replaced the previous Foreign Investment Law and associated licensing regime. The Investment Law applies to both Saudi and non-Saudi investors and is implemented through a national investor register, rather than a separate foreign investment licence. For - eign and domestic investors are, in principle, afforded equal treatment under comparable circumstances, subject to exclusions for certain strategic or sensitive activities and sectors that remain subject to additional approvals or restrictions. Regulatory Authorities and Their Jurisdiction The MISA All foreign entities intending to establish a business presence in Saudi Arabia are now required to register as investors with the MISA in accordance with the Investment Law and its Implementing Regulations, rather than obtaining a standalone foreign invest - ment licence. This registration is a precondition to engaging in investment activities in the Kingdom and will typically be co-ordinated with other commercial registration and sectoral licensing processes. The MISA continues to classify activities using the Inter - national Standard Industrial Classification (ISIC) and to supervise compliance with the list of excluded or restricted activities. Certain sectors remain subject to heightened scrutiny or prior approval, but the gen - eral presumption under the new regime is freedom of investment and equal treatment for local and foreign investors, subject to public policy, national security and sector-specific requirements. Zakat, Tax, and Customs Authority (ZATCA) The ZATCA oversees the tax regulatory framework for Saudi Arabia including zakat, corporate income tax, withholding tax (WHT), excise tax, customs duty, real estate transaction tax (RETT), VAT, double taxation agreements (DTAs), WTO laws, and transfer pricing regulations. The ZATCA is also instrumental in FDI tax and customs incentives related to, for instance, Sau - di Arabia’s regional headquarters (RHQ) programme, special economic zones (SEZs), and integrated logis - tics bonded zones (ILBZs).
courts are designed to handle disputes that arise within commercial transactions and issues related to trade and business activities. • Specialised Committees: The Saudi Arabian court system also consists of various committees within government ministries that address specific areas of disputes, including banking disputes, securities conflicts, labour issues, and insurance disputes. For example, the Committee for Resolution of Securities Disputes (CRSD) handles matters relat - ing to capital markets, while the General Secretar - iat of Zakat, Tax and Customs Committees (GSTC) handles matters related to zakat, tax and customs. Decisions of the courts and judicial committees of Saudi Arabia do not constitute binding precedent for the determination of subsequent cases. Neverthe - less, there appears to be a gradual move towards the collection and consolidation of decisions issued by these bodies, with a view to promoting greater trans - parency and consistency in decision-making. Under Saudi Arabian law, the determination of the appropri - ate forum for adjudicating a dispute ultimately rests with the court itself in its application of the law, irre - spective of any contractual choice of forum agreed between the parties. Jurisdictional clauses that purport only to give certain parties the option to choose a forum for adjudication are unlikely to be upheld, on the basis that they may be regarded as unfair. However, a specific provision in an agreement assigning jurisdiction to a particular court or judicial committee will strengthen the argu - ment for the named court or judicial committee to assume jurisdiction over the agreement. Proceedings in the courts and judicial committees of Saudi Arabia are conducted exclusively in Arabic. An action in the courts and judicial committees of Saudi Arabia may be brought on the basis of a document executed in a language other than Arabic if an Arabic translation thereof, certified by an authorised transla - tor, is submitted to the courts or judicial committees. In such circumstances, and notwithstanding any pro - vision to the contrary in the document or instrument, the Arabic text will prevail over the English text.
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