LLC or branch? Choosing a Saudi structure for a GCC company
For most GCC companies entering Saudi Arabia, a limited liability company (LLC) is the better structure: it is a separate Saudi company, so the parent's liability is limited to what it puts in. A branch is the parent company itself operating in the Kingdom, so the parent carries every obligation directly. A branch can make sense for a single contract or project where the client wants the parent's own name and track record. Ownership also changes the tax: under the Zakat Regulations in force since 2024, a branch of a GCC company pays income tax, while an LLC owned by GCC nationals pays zakat.
The difference in one table
| Saudi LLC (subsidiary) | Branch of your company | |
|---|---|---|
| Legal status | A separate Saudi company | Not a separate company; your parent company operating in Saudi Arabia |
| Liability | Limited to the parent's investment in the LLC | The parent is fully liable for the branch's debts and obligations |
| Tax | Zakat on the Saudi and GCC-owned share, 20% income tax on other shares | 20% income tax on the branch's profit |
| Activities | Those in its own licence and articles | Only activities allowed by both its licence and the parent's own documents |
| Documents from home | Parent documents, attested, to become a shareholder | Parent documents, attested, plus a board resolution to open the branch |
| Growth | Can own other companies and enter joint ventures | Hard to expand beyond its original scope |
| Saudization | Applies | Applies |
When an LLC is the right choice
- You plan to operate in Saudi Arabia for the long term.
- You want to protect the parent from the Saudi operation's liabilities.
- Your company is owned by GCC nationals and you want the Saudi company taxed through zakat rather than income tax.
- You may later bring in a Saudi partner, sell part of the business or set up further companies.
When a branch can make sense
- You are delivering one contract or project, and the client wants your company's own name, financial statements and track record behind it.
- Your activity is contracting, professional or technical work rather than open-ended trading.
- You accept that the parent stands behind everything the branch does.
The tax point most GCC companies miss
GCC nationals are treated like Saudis for zakat, so an LLC owned entirely by GCC nationals, directly or through wholly GCC-owned companies, pays zakat at 2.5% of its zakat base. A branch is different. Under the Zakat Implementing Regulations that apply to financial years from 1 January 2024, a permanent establishment of a non-resident Saudi or GCC person is no longer subject to zakat. In practice, a branch of a GCC company pays 20% income tax on its Saudi profit.
Neither is automatically cheaper. Zakat is calculated on equity and long-term funding, income tax on profit. Our guide on zakat and income tax explains the difference.
Trading activity: the same rule for both
If any owner in the chain is not a GCC national, the investment is registered with the Ministry of Investment, whichever structure you choose. For trading, the Ministry's Investor Guide (June 2026) sets minimum capital of SAR 30 million for 100% foreign ownership, or SAR 26,666,667 with a Saudi partner holding at least 25%. A branch does not avoid this rule. Our cost guide covers it in detail.
How each is set up
LLC: documents attested in your home country, investment registration if any owner is non-GCC, then Articles of Association, Commercial Registration, National Address and portal activations. Most foreign investors are operating within two to three months.
Branch: the parent's documents and a board resolution approving the branch, attested in the home country; registration with the Ministry of Investment; then the branch's Commercial Registration and portal activations. A general manager is appointed for the branch.
In both cases the document stage in your home country is the slowest part. Bahraini documents can be apostilled; UAE and Kuwaiti documents go through their foreign ministry and the Saudi embassy.
Frequently asked questions
Talk to us
We set up Saudi LLCs and branches for GCC companies from our Dammam office, 45 minutes from Bahrain, and handle the tax and government filings that come after. See company formation, or the pages for companies from the UAE, Bahrain and Kuwait.
Sources
- KPMG, new Zakat Implementing Regulation (Art. 5, permanent establishments of non-resident Saudi or GCC persons): kpmg.com
- HFW, Establishing a branch office or presence in Saudi Arabia (2025): hfw.com
- Ministry of Investment, Investor Guide, 13th edition (June 2026): misa.gov.sa
- PwC Worldwide Tax Summaries, Saudi Arabia corporate income tax: taxsummaries.pwc.com
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Alliant Co. · CR 7003521841 · Yazid Ibn Malik, Al Khalidiyah Ash Shamaliyah, Dammam 32231 · info@alliant.sa · +966 55 754 2748 · Alliant Co. is a private company and is not affiliated with any government authority.