Pakistan
Saudi Arabia
Saudi Arabia is the largest source of money sent home to Pakistan. Most Pakistanis who look at a Saudi company are not exporters studying a new market. They already work there, or their clients do.
The usual question is whether a Pakistani may own a Saudi company. The answer is yes, at 100% in most activities. The harder question is who files the application, and both countries ask it.
A corridor built on people, not on goods
The State Bank of Pakistan's last country table in its old format covers July to December 2024. Saudi Arabia comes first in it.
| Workers' remittances, July to December 2024 | USD million |
|---|---|
| From Saudi Arabia | 4,423.6 |
| From the United Arab Emirates | 3,584.1 |
| From the United Kingdom | 2,639.0 |
| All countries | 17,845.5 |
- Saudi inflows rose 35.9% on the same six months a year earlier.
- The community is put at around 2.5 million in press reporting. We could not read an official count.
- Services lead the business flow. The Pakistani firms that formation agencies cite in the Kingdom are in IT services, engineering and construction.
That profile matters for what follows. Services carry no published capital figure in Saudi Arabia, and most Pakistani readers are individuals rather than companies.
What Saudi Arabia asks, in four lines
The Saudi rules are the same for every nationality. They are set out in 100% foreign ownership in Saudi Arabia, and only the summary is repeated here.
- Full foreign ownership is the default for services, consulting, software and industry.
- Trading at 100% needs SAR 30,000,000 of capital, which closes import and distribution to a small company.
- The ministry registers companies and Premium Residency holders. An individual with neither has the entrepreneur track only.
- The general manager is expected to live in the Kingdom, even where the shareholder does not.
The third line is the one that sorts Pakistani applicants. Pakistan's own rules sort them the same way.
Three applicants, and the door each one has
- 1A Pakistani company with audited accountsSaudi side: regular registration. Pakistani side: general permission for exporters and IT firms, prior State Bank permission for other expansion.
- 2An individual resident in PakistanSaudi side: entrepreneur track or Premium Residency. Pakistani side: no category funds a private operating company abroad.
- 3A Pakistani living in Saudi Arabia on an iqamaSaudi side: entrepreneur track with the employer's no-objection letter, or Premium Residency. Pakistani side: savings earned abroad, not a remittance from Pakistan.
- 4Then, and only thenInvestment registration, commercial register, bank account.
The State Bank rules for a Pakistani company
Outward investment is governed by paragraph 13 of Chapter 20 of the Foreign Exchange Manual, rewritten by FE Circular No. 01 of 11 July 2024. Prior approval is no longer the general rule. It survives for one category.
| Category | Who | How it is cleared | Ceiling |
|---|---|---|---|
| A1 | IT companies | General permission, through the bank | Export account funds, or average net profit of 3 years, or USD 100,000 |
| A2 | Other exporters | General permission, through the bank | Export account funds, or 10% of average export earnings, or USD 100,000 |
| B | Young companies raising capital | General permission | USD 10,000 to form a holding company |
| C | Any other company expanding abroad | Prior permission of the State Bank | Case by case |
Two conditions apply to every category.
- The host country must allow repatriation of profits, dividends and capital. Saudi law does.
- The funds must be "legitimate and tax paid", and the investor on the active taxpayer list with a clean loan record.
The exporter route has its own fine print, and it shapes the Saudi company.
- The formula is annual. Remittances from the interbank market may not exceed, in a calendar year, 10% of average export earnings over the last three calendar years, or USD 100,000 if higher.
- Total investment abroad is capped at 80% of the company's equity.
- One entity per jurisdiction. A second Saudi entity falls outside the general permission.
- The Saudi business must be of a similar nature to the Pakistani one, vertical integration included.
- Category C adds a feasibility report and is open only to companies incorporated in Pakistan.
A contractor or a services firm with no export record is in category C. Its file goes to the Exchange Policy Department in Karachi with the bank's recommendation, and the manual gives no processing time.
An individual in Pakistan: the door that is missing
The manual lists what a resident individual may do abroad. The list is short.
| Permitted for a resident individual | Limit |
|---|---|
| Shares of listed companies abroad | USD 25,000 a year, and 1% of the company at most |
| Employee share option plans | USD 50,000 a year, and 3% at most |
| Sweat equity, with no money paid | 20% of the company at most |
None of these lets an individual remit capital into a Saudi company he founds. Category C, the expansion route, is reserved for companies.
So the two regimes meet. The Saudi ministry expects a corporate applicant with last year's accounts, and the State Bank lets a company, not a person, invest in an operating business abroad. For a founder based in Pakistan, the practical route is to invest through his Pakistani company.
Already in the Kingdom on an iqama
This is the most common reader, and the one the standard guidance leaves out. The position differs on each side.
- In Saudi Arabia, the entrepreneur track asks a resident individual for a no-objection letter from the current employer and a copy of the residence permit, plus a support letter from a Saudi university or an accredited incubator.
- Premium Residency removes those steps. It is a paid status, and a holder is exempt from the company documents.
- In Pakistan, paragraph 13 is written for "the residents of Pakistan". Capital paid from savings held abroad is not a remittance from Pakistan. Confirm your own status with your bank.
- For tax, section 82 makes an individual resident when present in Pakistan for 183 days or more in the tax year.
One clause needs care. Section 82(d), added in 2022, also treats as resident a citizen who is not present in any other country for more than 182 days "or who is not a resident taxpayer of any other country". Saudi Arabia has no personal income tax, so the second limb is read in two ways. Have it confirmed before relying on non-resident status.
A partner who returns to Pakistan becomes a resident again, and the reporting below starts to apply.
What Pakistan taxes: section 109A and the foreign assets statement
Section 109A of the Income Tax Ordinance taxes a resident on the income of a controlled foreign company. All four tests must be met.
| Test in section 109A | A Saudi operating company |
|---|---|
| More than 50% held by Pakistani residents, or more than 40% by one | Usually met |
| Foreign tax below 60% of the Pakistani tax on the same income | Not met at 20%, since 60% of the 29% company rate is 17.4% |
| No active business income | Not met if it trades with third parties in the Kingdom |
| Shares not listed | Met |
- An ordinary Saudi company taxed at 20% is outside the rule on the second test alone.
- A zero rate regime changes that. A regional headquarters or a special zone can fall under 17.4%, and the active income test then decides.
- Sales to an associate do not count as active income. A Saudi company that mainly invoices its Pakistani parent is the exposed case.
- Two floors apply. Nothing is attributed below a 10% holding, or where the company's income is under PKR 10 million.
- Section 116A is separate. A resident individual with foreign assets of USD 100,000 or more files a foreign income and assets statement.
How Saudi Arabia computes its own 20% is covered in Saudi corporate tax and zakat.
The 2006 tax treaty, read on the text
The convention was signed on 2 February 2006 and covers Saudi income tax and zakat. Its caps are less generous than they look, because Saudi domestic rates are already low.
| Payment from the Saudi company | Saudi domestic rate | Treaty cap | Rate that applies |
|---|---|---|---|
| Dividend to a Pakistani company | 5% | 5% | 5% |
| Dividend to an individual | 5% | 10% | 5% |
| Income from debt claims | 5% | 10% | 5% |
| Royalties | 15% | 10% | 10% |
- Only royalties improve. A treaty sets a ceiling, so a cap above the Saudi rate changes nothing.
- The combined Saudi charge on distributed profit stays at 24%: 20% in the company, then 5% on the dividend.
- Services create a permanent establishment after six months in any twelve, for the same or a connected project. Building sites follow the same six months.
- Pakistan exempts income the Kingdom may tax, under Article 23, except dividends and debt claim income, which receive a credit for the Saudi tax.
The Saudi rate table and the relief procedure are in Saudi Arabia withholding tax for non-residents.
Bringing profit back, and the State Bank's follow-up
A company that invested under paragraph 13 keeps obligations in Pakistan for as long as it holds the shares.
- Within one month: evidence of the investment and a return on form V-100, through the bank.
- Every year: the audited financial statements of the Saudi company.
- On each dividend or sale: proceeds come back through banking channels and are converted into rupees.
- No parking abroad. These amounts may not be credited to a foreign currency account.
Saudi law lets an investor transfer profits out without delay. The Pakistani rule decides where they must land.
Visas and documents: what we could confirm
Document authentication is the clearer half. Both countries are party to the Apostille Convention, Saudi Arabia since 7 December 2022 and Pakistan since 9 March 2023.
The Investor Guide still asks for company documents "certified by the Saudi Embassy". Ask the ministry which it accepts before you legalise anything.
Visa rules are the unclear half.
| Point | What is reported | Status |
|---|---|---|
| Business visit visa | Electronic invitation from a Saudi chamber of commerce, 1 to 3 working days | Investor Guide |
| Length of stay | Single entry of 30 days for Pakistani nationals since 1 February 2025 | Advisory firm, not confirmed for October 2026 |
| Length of stay | 90 days single entry, 180 days multiple entry | Formation agency, undated |
We could not read the current rule on an official Saudi site. Check with the embassy in Islamabad or the consulate in Karachi before booking, and do not plan a registration around a long first stay.
The order that works
- Identify the applicant: Pakistani company, individual, or iqama holder.
- Check the activity code against the Saudi table, trading first.
- Settle the Pakistani category and designate the bank, or file for State Bank permission.
- Fix the Saudi capital at a figure the Pakistani ceiling supports.
- Decide who the resident manager is, because the bank account follows that person.
- Register, as set out in how to register a company in Saudi Arabia.
The account itself, and the 90 days the central bank allows for the manager's iqama, are in business bank account in Saudi Arabia.
The bottom line
A Pakistani owner faces no Saudi rule aimed at Pakistan. The constraint is the applicant: both countries are built for a company with accounts, and an individual has to find another door.
For an exporter or an IT firm, that door is open and formulaic. For a contractor with no exports, it runs through the State Bank. For someone already on an iqama, it is the employer's letter or Premium Residency.
If you want the Saudi side handled once your Pakistani route is clear, start with the Saudi Arabia company formation service.
Frequently asked questions
Can a Pakistani own 100% of a company in Saudi Arabia?
Yes, in every activity open to foreign investment, which includes most services. Trading at full foreign ownership requires SAR 30,000,000 of capital, and telecoms and regulated professions require a Saudi shareholder.
Does the State Bank of Pakistan have to approve the investment?
Not always. Exporters and IT companies invest under a general permission handled by their bank. Prior permission of the State Bank is required when another Pakistani company invests abroad to expand its business.
How much can a Pakistani exporter send to fund a Saudi subsidiary?
From the interbank market, up to 10% of its average annual export earnings over the last three calendar years, or USD 100,000 if higher, in each calendar year. Funds in its exporter's foreign currency account can be used without that limit.
Can an individual living in Pakistan fund a Saudi company personally?
The Foreign Exchange Manual gives individuals three permissions only: listed shares up to USD 25,000 a year, employee share plans, and sweat equity up to 20%. None covers cash capital for a private operating company.
I work in Saudi Arabia on an iqama. Can I open my own company?
The published path for a resident individual is the entrepreneur track, which asks for a no-objection letter from your employer, a copy of your residence permit, and a support letter from a Saudi university or incubator. Premium Residency is the alternative.
Is there a tax treaty between Pakistan and Saudi Arabia?
Yes, signed on 2 February 2006. It caps dividends at 5% for a company and 10% otherwise, debt claim income at 10% and royalties at 10%. Only the royalty cap is below the Saudi domestic rate.
Will Pakistan tax the profits of my Saudi company before they are distributed?
Only if section 109A applies. A Saudi operating company taxed at 20% is above the 17.4% threshold. A zero rate regime, or a company selling mainly to its Pakistani parent, needs a closer look.
Do Pakistani documents need embassy legalisation or an apostille?
Both countries are party to the Apostille Convention. The Investor Guide still refers to certification by the Saudi Embassy, so ask the ministry which form it accepts for your file.
Sources
- State Bank of Pakistan, Foreign Exchange Manual, Chapter 20, paragraph 13: the categories of equity investment abroad, the prior permission kept for business expansion, the export earnings formula and the duty to repatriate dividends
- Federal Board of Revenue, Income Tax Ordinance 2001 amended up to 30 June 2026: section 109A on controlled foreign companies, section 82 on residence, section 116A on foreign assets, and the 29% company rate
- Pakistan and Saudi Arabia tax convention signed on 2 February 2006, as notified by S.R.O. 1194(I)/2006: the caps on dividends, debt claims and royalties, and the six month services threshold in Article 5
- MISA Investor Guide, 13th edition 03-2026: the documents asked of a foreign company, the Premium Residency exemption, the entrepreneur track and the SAR 30,000,000 capital for trading
- HCCH status table of the Apostille Convention: in force for Saudi Arabia on 7 December 2022 and for Pakistan on 9 March 2023
Official and read on 5 October 2026: paragraph 13 of Chapter 20 of the State Bank of Pakistan Foreign Exchange Manual, as amended by FE Circular No. 01 of 11 July 2024; the Income Tax Ordinance 2001 in the Federal Board of Revenue edition amended up to 30 June 2026; the 2006 tax convention in the text notified by the Federal Board of Revenue; the HCCH status table. The remittance figure is the State Bank's provisional table for December 2024, the last one published in that format. The Saudi rules are those of the guides in this series, which rest on the Investment Law, the MISA Investor Guide and the SAMA Rulebook. Press reporting, presented as such: the size of the Pakistani community in the Kingdom. To reconfirm before acting: the visa rules applied to Pakistani nationals in October 2026, which could not be read on an official Saudi site; how the Federal Board of Revenue reads section 82(d) for a citizen living in a country with no personal income tax; how Pakistan taxes a Saudi dividend in the hands of a resident; whether super tax enters the 60% comparison in section 109A; and the foreign exchange status of a Pakistani living abroad. No Pakistani or Saudi lawyer has reviewed this page. This is not legal or tax advice.