Saudi Arabia has introduced a new Investment Law, which came into effect from February 2025. The law replaces the previous Foreign Investment Law from 2000, introducing key reforms aimed at creating a more transparent, equitable, and investor-friendly environment, central to the Kingdom’s Vision 2030.

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Investment framework

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One of the most notable changes is the extension of the investment framework to both local and foreign investors. This signifies a move toward a unified system where investors are treated equally under similar conditions, regardless of nationality, subject to considerations of public interest and national security.

The law provides investor protections, including the right to repatriate capital and profits, protection against indirect expropriation, and safeguards for intellectual property and confidential business information. These provisions bring Saudi Arabia’s legal regime more in line with global investment standards, following benchmarking against jurisdictions like Singapore, Germany, and the UAE.

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Simplified procedures

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Previously, foreign investors were required to obtain a formal license. The new law replaces this with a registration-based system. Foreign investors must now register each investment with the Ministry of Investment (MISA), while local investors may do so voluntarily. This change aims to reduce bureaucratic hurdles and enhance procedural clarity. Registered investors must also submit annual declarations to confirm the accuracy of their information, part of a broader effort to promote transparency.

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Incentives and sectoral opportunities

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Although the final regulations do not list specific incentives, prior drafts suggest that a range of benefits, financial, tax-related, regulatory, and logistical, may be offered for investment in priority sectors. These sectors will be defined in line with national objectives and evaluated through published eligibility criteria. This approach signals the government’s intent to attract targeted, high-impact investments that align with long-term economic diversification goals.

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Clearer rules for restricted and prohibited activities

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The regulations introduce new clarity around activities where foreign investment may be limited. Two categories are defined:

• Prohibited activities: Require prior approval from a high-level committee.
• Restricted activities: May be open to foreign investors who meet specific conditions.
  
  

The relevant criteria and processes will be made publicly available through MISA’s Investor Guide, allowing businesses to navigate these rules with more certainty.

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Proportionate penalty system

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The updated regime includes a revised system for compliance and penalties, distinguishing between serious and minor violations. In cases of non-serious breaches, investors have the opportunity to avoid fines by rectifying issues within 30 business days. For unresolved or repeat violations, fines of up to SAR 300,000 may be imposed, and in serious cases, registration can be revoked. This tiered system reflects a more nuanced approach to enforcement and encourages proactive compliance.

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Should you have any queries regarding the above information or if you require assistance with your corporate, employment or immigration matter, please get in touch with a legal professional at Hudson McKenzie via email at londoninfo@hudsonmckenzie.com or by telephone +44(0) 20 3318 5794.

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The information provided does not amount to legal advice.