Company Formation Costs in Saudi Arabia: Government Fees and First-Year Expenses in One Table

Company formation cost in Saudi Arabia splits into two parts: fixed, published government fees paid at formation and then every year, and first-year operating expenses that vary widely between businesses. For a limited liability company (LLC), the Ministry of Commerce service page lists SAR 1,200 for the commercial registration (CR) and SAR 500 to publish the articles of association, plus 15% VAT.

Those fees are not the largest line in the budget. Premises, staff, GOSI contributions and accounting systems decide how much you really need to start and keep going through year one. A plan built on CR fees alone usually shows its gap by the third month.

This article puts the verified government fees in tables, sets out the first-year expense lines and what drives each one, and ends with how to record formation costs in your books. We have not quoted any figure that an official body does not publish; where costs vary, we describe them without a number.

How Much Does It Cost to Start a Company in Saudi Arabia?

The minimum government fees to form an LLC are SAR 1,700 before tax (SAR 1,200 for the CR and SAR 500 for publication), or SAR 1,955 once 15% VAT is added. For a sole establishment, the CR issuance fee is SAR 500.

On top of these come lines that depend on your activity, city and team size: Chamber of Commerce membership, municipal or sector licences, premises, salaries and GOSI, and systems. So the better question is not what the CR costs, but what the business needs to operate for a full year.

Government Formation Fees in Saudi Arabia

Government formation fees are published on the Ministry of Commerce service pages on the Saudi Business Center and paid online through SADAD or card. The final amount appears on the invoice before payment, so always check it when you apply.

Commercial Registration Fees

The Establish a Limited Liability Company service page lists SAR 1,200 for the CR. Under the Commercial Register Law applied since April 2025, a CR no longer expires, but its data must be confirmed every year for a fee that depends on the entity type. If the confirmation is not filed within 90 days of its due date, the CR and its linked services are suspended.

Chamber of Commerce Membership

The business is registered with the Chamber of Commerce for its location automatically as part of the CR. The membership fee depends on the membership grade and the chamber, and the Ministry of Commerce does not list it among formation fees, so check it on your chamber’s portal before finalising the budget.

Articles of Association and Publication

The articles of association are prepared online within the formation service with no separate drafting fee, but publishing them after the CR is issued costs SAR 500 for an LLC, according to the service page. A one-person company pays the same fees because it is an LLC with a single owner, and the Companies Law requires it to have articles of association.

Also read: sole establishment or company: fees, liability and tax compared, if you have not settled on the entity type yet.

First-Year Operating Expenses After Formation

First-year expenses are the largest part of a formation budget and the part that needs careful estimating. The most reliable way is to build them month by month, multiply by twelve, and add a contingency margin.

Office and National Address

The business’s national address is registered with Saudi Post (SPL) automatically when the CR is issued. The premises themselves depend on city, district, size and activity, and some activities need a municipal licence for the location before operating. Treat annual rent, fit-out, utilities and internet as their own budget line.

Systems and Accounting Software

Any VAT-registered business has had to issue e-invoices since 4 December 2021, and handwritten invoices are no longer accepted. ZATCA rolls out phase two (integration with the Fatoora platform) in waves; wave 25 covered taxpayers whose VAT-subject revenue exceeded SAR 187,500 in any year from 2022 to 2025.

The accounting system is therefore part of first-year costs, not an optional extra. The Daysum cloud ERP combines accounting, inventory, POS and ZATCA-approved e-invoicing in one Odoo-based system, and its cost depends on the number of users and modules you need.

Staff and GOSI

Salaries are usually the largest recurring line. On top of them the employer pays the GOSI occupational hazards contribution of 2% of the contributory wage for every employee, Saudi or non-Saudi, plus the employer’s share of Saudi employees’ contributions, which GOSI sets according to the law that applies to each employee.

Example: a non-Saudi employee with a contributory wage of SAR 6,000 a month costs SAR 120 a month in occupational hazards contributions, or SAR 1,440 a year. Contributions are due within the first 15 days of the following month. The Daysum HR and attendance system calculates salaries and deductions each month without manual spreadsheets.

If you want to review your budget lines before formation and see which systems you actually need in the first months, talk to the Daysum team about your activity and expected team size.

Cost Table by Entity Type

The table brings together the verified government fees for the two most common entities, alongside the lines that vary so you can fill in your own figures.

Foreign investors have an extra step: a non-Saudi partner needs a valid investment licence or registration certificate from the Ministry of Investment (MISA) before formation, with its own fees and requirements listed on the MISA platform.

How to Record Formation Costs in Your Accounts

Under IFRS as adopted in Saudi Arabia, start-up and formation costs are recognised as an expense when incurred and are not capitalised as an intangible asset. This covers legal costs of establishing the entity and pre-operating expenses. Amounts paid to buy property or equipment, such as furniture and computers, are added to the cost of that asset instead.

Example: a partner pays LLC formation fees of SAR 1,955 from a personal account before the company’s bank account is opened. The amount is an expense of the company, and the partner’s current account is credited because the company owes the partner that amount.

We have kept the VAT inside the expense here because recovering input VAT on costs incurred before VAT registration has its own conditions, so check them with your accountant. If you prepared an estimated budget before formation, you can compare actual against plan from the first month.

Conclusion: A Realistic Formation Budget for Your Saudi Company

Government fees to form an LLC are clear and modest: SAR 1,955 at formation including VAT, and SAR 1,200 for each annual confirmation. What really shapes your budget is premises, salaries, GOSI and systems, and these need a realistic monthly estimate.

1. Add up the fixed government fees for your chosen entity.
2. Confirm chamber membership and activity licences with the relevant bodies.
3. Estimate rent, salaries and GOSI monthly, then for the year.
4. Add the cost of your accounting and e-invoicing system.
5. Record formation costs as an expense from the first entry and track actual against budget.

For the procedural steps in order, see how to start a company in Saudi Arabia. If you want a system that records formation costs, payroll and invoices from day one, contact the Daysum team.

FAQs About Company Formation Costs in Saudi Arabia