The Complete Guide to the Saudi Industrial License

Key Fact: The application for a Saudi Industrial License requires you to pay ~SAR 2,000 per year, along with some subscription fees at the Ministry. All invoices must be paid within 60 days of issuance; otherwise, your services will automatically be terminated, and the whole application process starts again.

All the online guides give you information about the industrial license in Saudi Arabia and the basic requirements needed for its registration. But few provide you with information regarding the important operational requirements, including: payment schedule, renewal policy, MISA guidelines for review, and an action plan in case of punitive cancellation of the industrial license.

This comprehensive guide covers all aspects of an industrial license, including the application process, cost structure, renewal policy, technical submission process, and the liquidation process in case of cancellation of an industrial license.

What is an Industrial License in Saudi Arabia?

An Industrial License in Saudi Arabia is a formal regulatory license issued by the authorities to either foreign or domestic businesses, providing permission for them to set up and run any form of industrial establishment within the Kingdom.

The license is granted under the authority of the Ministry of Investment (MISA) and the Ministry of Industry and Mineral Resources (MIM) and serves to ensure that the industries function within the legal Framework of Saudi Arabia, supporting national industrial expansion and safety standards.

Who Needs an Industrial License?

An enterprise established to carry out manufacturing, processing, or transformative activities in KSA must have an Industrial License. The industries that need the license include:

• Heavy Industries
• Light Industries
• Transformative Industries
• Other industrial segments regulated under Saudi industrial classifications.

Why is an Industrial License Important?

The license scheme is part of the larger strategic objectives for economic modernization of Saudi Arabia:

• Technology Transfer: Helps localize new technology and technical expertise in the industrial sector.
• Economic Diversification: Decreases dependence on one oil income stream.
• Export Growth: Strengthens the national industrial chain and export capacity in Saudi Arabia.
• Workforce Development: Ensures employment and training of Saudi nationals.
• Market Competitiveness: Helps improve the competitiveness of products.
• Regional Balance: Helps develop balanced industrial investments in all regions in KSA.

Industrial Activities Covered by the License

The Industrial License Scheme encompasses a broad range of activities divided into three main categories:

1. Heavy Industries: Activities that require capital investment with the use of heavy machinery and equipment; primary metals processing and manufacture of chemicals or large fabricated parts.
2. Light Industries: Low-intensity manufacturing activities such as manufacturing consumer items, assembling, packing, and manufacturing parts.
3. Transformative Industries: Industries whose activities include transformation of raw or semi-processed material into high-value finished products for commercial/industrial uses.

Practical Note: Requirements for licensing, land allocations, and secondary approvals may be determined by the specific activity code. Businesses need to check requirements with MISA for each specific activity before applying.

Documents Required for an Industrial License in Saudi Arabia

To ensure a smooth application process, prepare the necessary corporate, identity, and financial documentation upfront:

1. Commercial Registration or Identity Proof

Required documentation varies based on partner ownership structure:

• Foreign Company Shareholder: Copy of the commercial registration (CR), certified by the Saudi Embassy in the country of origin.
• GCC Citizen Shareholder: Copy of the valid National ID card.
• Saudi Individual Shareholder: Copy of the National ID card accompanied by an official “Absher” statement confirming employment/profession status.
• Saudi Legal Entity Shareholder: Copy of the Saudi Commercial Registration (CR).

2. Financial Statements

• The foreign applicant company must submit financial statements for the most recent financial year.
• Financial statements must be officially attested and certified by the Saudi Embassy.

3. Zakat and Income Certificate

• Entities must maintain a valid Certificate of Zakat and Income.
• This certificate must be kept on record and attached during online filings (or submitted manually in case of system errors).

Industrial License Application Requirements

The procedure for applicants before submitting their applications should be as follows:

1. Confirm the Industrial Activity:

Verify which particular industrial activity, according to the Saudi classification, is proposed to be done, and confirm that the MISA activity segments are covered.

2. Prepare Corporate Documents:

Gather the commercial registrations, audited financials, identification proofs, and Zakat papers.

3. Review Ministry Requirements (Section 03.00):

Review Section 03.00 of the Ministry of Investment User Manual before submission. This step is essential to avoid rework and/or any delays.

Industrial License Fees in Saudi Arabia

Understanding the total cost structure is essential for budget forecasting and compliance.

The 60-Day Payment Deadline

Once an invoice is generated by the Ministry, a strict 60-day payment window applies.

Important Compliance Note: The 60-day deadline is an absolute administrative deadline. If there is a failure to pay invoices by the 60-day deadline, service will be automatically terminated, with the applicant having to restart the application process from scratch.

Industrial License Renewal in Saudi Arabia

For the continued validity of your Industrial License, you should complete these annual obligations:

1. Update Business Information: Yearly verification and updating of business details in the MISA system.
2. Review Section 03.00: Verify against section changes before submitting the renewal form.
3. Maintain Supporting Certificates: Maintain a valid certificate of Zakat and Income.
4. Settle Renewal Fees: Pay the ~SAR 2,000 industrial license fee and standard subscription fee within the 60-day invoice period.

System Fallback: Technical Errors During Online Filing

In case you encounter any technical problem, such as a system error during your renewal process online, ensure that you maintain a valid hard/digital copy of your Zakat and Income Certificate. Filing technical problems with the technical portal do not absolve the need for filings; the required documents have to be filed manually through designated investor service channels.

Industrial License Cancellation & Liquidation Workflow

In the event of issuance of a license cancellation decision by the Ministry of Investment, the business will have to undertake a process of statutory liquidation. A license cancellation decision does not absolve the company from compliance in KSA.

1. Submit Liquidation Application (Service No. 9.02):

File a specialized application for liquidation/renewal under the MISA Service No. 9.02.

2. Finalize Employee Status (Ministry of Labor):

Exit all sponsored employees, close all outstanding liabilities on end-of-service benefits, and close the labor file.

3. Settle GOSI Liabilities:

Settle all social insurance liabilities and close the entity file with the General Organization for Social Insurance (GOSI).

4. Settle Tax and Zakat Liabilities:

Clear up all outstanding tax liabilities, get the final clearance, and close the file with the Zakat, Tax and Customs Authority (ZATCA).

5. Cancel Municipal & Regulatory Licenses:

Cancel all licenses from the local municipality (Balady) and specialized regulatory bodies in case of industries.

6. Cancel Commercial Registration (CR):

Cancel Commercial Registration from the Ministry of Commerce.

7. Cancel Investor Iqamas:

Exit visas have to be obtained for foreign investors, and their Iqamas must be cancelled.

Industrial License: Application vs. Renewal vs. Cancellation

Common Issues Affecting Compliance

• Failing to review Section 03.00: Submission without compliance with the present Ministry manual requirements.
• Uncertified Financials: Submission of records of foreign companies without Saudi embassy accreditation.
• Ignoring the 60-Day Invoice Clock: Letting invoices lapse, requiring a second application process.
• Incomplete Liquidation: Taking a canceled license to mean automatic closure of government-related accounts.

Frequently Asked Questions

What is an Industrial License in Saudi Arabia?

An Industrial License is an authorization provided by the government of Saudi Arabia to either local or foreign companies that allows them to run their industrial or manufacturing activities in KSA.

Who needs an Industrial License in KSA?

This type of license is mandatory for any company that involves the production process of raw materials, manufacturing process, or any form of chemical activities in KSA.

How much does an Industrial License cost in Saudi Arabia?

The standard annual cost of license renewal is ~SAR 2,000 (up to 5 years). Additionally, there is an additional service or subscription fee charged by MISA: ~SAR 10,000 for the first year and ~SAR 60,000 for all subsequent years.

What happens if I do not pay the Industrial License invoice within 60 days?

Your subscription will be canceled automatically, and you will be obliged to start the entire application process again.

Do I need to reapply if my Industrial License service is cancelled?

Yes. Once your license service has been canceled because of not paying fees or any other reason, you can no longer renew the previous one.

What is Section 03.00 of the Ministry of Investment manual?

Section 03.00 includes regulatory requirements, technical criteria, and operating standards that applicants have to comply with before submitting applications or renewals.

What should I do if there is a technical error during online submission?

In case of failure of the online submission process, you are supposed to always keep your updated Zakat and Income Certificate, and then you can submit the required documents offline using MISA investor relations centers.

What is Service No. 9.02 used for?

Service 9.02 is a particular application by MISA to renew the license for the purpose of legal liquidation and company closure.

Do I need to cancel the Commercial Registration after license cancellation?

Yes. After cancelling the Industrial License, it’s not sufficient; you have to systematically cancel labor, GOSI, ZATCA, and municipality accounts before cancelling the CR.

References

• Ministry of Investment (MISA): misa.gov.sa
• Ministry of Industry and Mineral Resources (MIM): mim.gov.sa
• Zakat, Tax and Customs Authority (ZATCA): zatca.gov.sa
• Ministry of Commerce (MC): mc.gov.sa
• General Organization for Social Insurance (GOSI): gosi.gov.sa