Search

Conduct Business in Saudi Arabia with Confidence

It’s an exciting time to do business in the Kingdom. Working with the right law firm makes all the difference. Whether you’re a Saudi national with entrepreneurial ambitions or a foreign company assessing the market, we can help.

Learn About Al-Ghazzawi & Partners

Insights

Insights into Saudi Arabia’s Evolving Laws & Regulations

HomePublicationsCompliance Steps For Online Businesses

Compliance Steps For Online Businesses

Feb 17, 2025

Compliance Steps For Online Businesses
Download (PDF)

 

As the digital economy expands, Saudi e-commerce compliance has become an important aspect of running an online business. Navigating the landscape of online business regulations in Saudi Arabia is essential not only to avoid legal risks but also to build consumer trust and ensure long lasting success. This guide outlines key compliance areas for online businesses, focusing on the Saudi Arabian e-commerce Law and regulatory requirements.

Understanding the Legal Frameworks

Before launching an online business, it is vital to understand Saudi business legal requirements which govern e-commerce operations. Businesses must comply with a combination of domestic laws and international regulations.

  • E-Commerce Law: The Saudi Arabian e-commerce law governs online transactions, ensuring fair practices for consumers and businesses alike. Key aspects include consumer protection, transaction transparency, and clear terms of service.
  • International Regulations: For businesses targeting global markets, compliance with international standards like the General Data Protection Regulation (GDPR) is critical. This regulation applies to any business dealing involving personal data of EU residents in any manner.
  • Regulatory Bodies: Key authorities overseeing online businesses in Saudi Arabia include:
    – Ministry of Commerce Responsible for consumer protection and commercial compliance.
    – Communications and Information Technology Commission (CITC): Regulates e-commerce practices and digital infrastructure.

Data Protection and Privacy

Data privacy and security are paramount for online businesses. The Personal Data Protection Law (PDPL) in Saudi Arabia mandates stringent guidelines to protect personal data.

Key Provisions of PDPL:

  • Obtain explicit consent from users before collecting personal data.
  • Limit data collection to necessary purposes only.
  • Implement robust measures to prevent data breaches.

Best Practices:

  • Follow online payment security regulations such as using encrypted payment systems and secure databases.
  • Regularly audit data management systems.
  • Provide transparent and accessible privacy policies to users.

Tax and Financial Compliance

Understanding the tax obligations for e-commerce businesses in KSA is critical for financial compliance.

  • VAT Compliance: Saudi Arabia imposes a 15% Value Added Tax (VAT) on online transactions. Businesses must ensure accurate charging of VAT and reporting the same within the required period.
  • Zakat Obligations: Zakat is an Islamic tax that businesses must calculate and pay annually. Compliance with Zakat regulations is monitored by the General Authority of Zakat, Tax, and Customs (ZATCA).
  • International Tax Considerations: Cross-border transactions require careful navigation of international tax treaties to avoid double taxation and ensure proper reporting.

Consumer Protection and Transparency

Building trust with consumers is fundamental to the success of any online business. Making sure your business complies with online consumer rights in Saudi Arabia helps build trust and credibility with your client base

  • Consumer Protection: The Guide to Consumer Rights and Responsibilities issued by the Ministry of Commerce, which is updated regularly, protects buyers by mandating businesses to stipulate clear terms and conditions, refund policies, and the reliable delivery of promised goods or services.
  • Transparency in Transactions :
    – Clearly display prices, shipping fees, and return policies.
    – Provide detailed description of products or services to avoid misunderstanding and confusion.

Intellectual Property and Licensing

Protecting intellectual property (IP) is essential for securing a business’s products, services, and brand identity.

  • IP Protection in Saudi Arabia: Register trademarks, copyrights, and patents with the Saudi Authority for Intellectual Property (SAIP) as well as local domain names with the registrar approved by Saudi Network Information Center
  • Licensing Requirements: Online businesses in Saudi Arabia need a trade license to operate legally in the online marketplace.

Adapting to Modern Work Models

With the rise of remote work, businesses must consider compliance with Saudi Arabian internet laws and digital business regulations related to employment and taxation.

  • Remote Work Compliance
    – Ensure employment contracts align with Saudi labor laws, including provisions for remote workers.
    – Address tax and social insurance obligations for both local and international employees.
  • Digital Infrastructure for Remote Teams: Implement secure collaboration tools to maintain data security and ensure effective communication within remote teams.

Accessibility and Inclusivity

Creating accessible and inclusive online platforms not only works in the business’s favor as a good practice but also often comes as a legal requirement.

  • Digital Accessibility Standards: Adhere to the Web Content Accessibility Guidelines (WCAG) to make websites usable for people with disabilities.
  • Inclusivity in Digital Platforms: Incorporate features such as language options and adaptable user interfaces to accommodate diverse audiences.

FAQs

Do I need a business license to run an online store in Saudi Arabia?

Yes, all e-commerce businesses in Saudi Arabia must obtain a commercial registration (CR) from the Ministry of Commerce. Additionally, depending on your business type, you may need an e-commerce license to operate legally.

What are the key legal requirements for online businesses in Saudi Arabia?

To ensure Saudi e-commerce compliance, businesses must adhere to:

  • Saudi Arabian E-Commerce Law – Covers consumer protection and transaction transparency.
  • Personal Data Protection Law (PDPL) – Regulates data privacy and security.
  • VAT & Zakat regulations – Ensures tax compliance with ZATCA.
  • Intellectual Property Laws – Protects trademarks and copyrights.
  • CITC regulations – Covers digital infrastructure and cybersecurity.
What is the Personal Data Protection Law (PDPL) in Saudi Arabia?

The Saudi Arabian Personal Data Protection Law (PDPL) governs how businesses collect, process, and store personal data. Under PDPL, businesses must:

  • Obtain explicit user consent before collecting data.
  • Limit data collection to necessary purposes.
  • Implement strong security measures to prevent data breaches.
Do Online Businesses in Saudi Arabia need to comply with GDPR?

Yes, if your Saudi online business collects data from EU residents, GDPR compliance is required in Saudi Arabia. This applies even if your business operates solely within the Kingdom.

How is VAT applied to online businesses in Saudi Arabia?
  • Saudi VAT rate: 15%.
  • Businesses must register for VAT with the General Authority of Zakat, Tax, and Customs (ZATCA).
  • VAT must be applied to all online sales, except for exempt categories.
  • Businesses must file VAT returns regularly to remain compliant.
What are the consumer protection rules for Saudi e-commerce businesses?

  • To comply with online consumer rights in Saudi Arabia, businesses must:

    • Provide clear refund and return policies.
    • Display transparent pricing and shipping fees.
    • Offer accurate product descriptions to prevent misrepresentation.
    • Ensure secure and reliable online payment methods.
What happens if my online business fails to comply with Saudi regulations

  • Failure to comply with online business regulations in Saudi Arabia can lead to:

    • Hefty fines or business suspension.
    • Legal action from consumers.
    • Revocation of trade license.
    • Reputational damage, leading to loss of consumer trust.

Are You Ready?

Let's Work Together

Let us help you conduct business with confidence. Contact our legal team today for immediate assistance.

Contact Us

Offices Across The Region

Dammam Office

AlGhazzawi Business Tower, 8th Floor
Prince Muhammad Street
P.O. Box 381, Dammam 31411
T: +966 13 8331611
F: +966 13 8331981
View Map

Jeddah Office

Jeddah Commercial Centre, 3rd Floor
Al Maady Street, Corniche Al Hamra
P.O. Box 7346, Jeddah 21462
T: +966 12 6531576
F: +966 12 6532612
View Map

Riyadh Office

King Faisal Foundation, North Tower, 4th Floor
King Fahd Road
P.O. Box 9029, Riyadh 11413
T: +966 11 4632374
F: +966 11 4627566
View Map

Representative Office - Cairo

Nile City Tower, North Tower, 23rd Floor
2005 Corniche El Nil, Ramlet Beaulac
Cairo, Egypt 11221
T: +202 2461 9647
F: +202 2461 9647

View Map

Subscribe and Stay Updated on the Kingdom's Laws and Regulations

Banking & Finance

Vision 2030 is poised to transform the banking and finance industry, along with many other sectors in the Kingdom. Several large international banks and financial institutions are already expanding their operations here, and recent mega-mergers in the banking sector have made the changes very prominent. As a result, we expect to see a significant impact on debt markets, project financing, and both conventional and Islamic banking.

AlGhazzawi & Partners can help your business make the most of the changing landscape. We have more than 50 years of experience in the Kingdom of Saudi Arabia handling debt finance, banking, and financial transaction matters under both conventional and Islamic law. Our legal team has tackled some of the most complex legal challenges faced by both domestic and foreign-owned companies across a variety of industries and sectors while concluding transactions with banks and financial institutions.

Learn More

Bankruptcy & Insolvency

Bankruptcy and corporate insolvency cases create challenging legal hurdles that require knowledge and proficiency to navigate, especially when a salvage exercise is involved. Any corporate restructuring process requires a deep understanding of the rights and obligations of all affected parties. With experience in all key industry sectors, our team is equipped to assist you in meeting claim deadlines and will guide you to adeptly fulfill all regulatory provisions, prioritizing the protection of your rights and interests both inside and outside of court.

At AlGhazzawi & Partners, we have over 50 years of experience advising debt and equity financers, borrowers, lenders, arrangers, project sponsors, international financial organizations and export-credit agencies through corporate liquidation, insolvency, and bankruptcy proceedings. Our legal team has tackled some of the most complex legal challenges faced by both domestic and foreign-owned companies across a variety of industries and sectors.

 

Learn More

Business Investment

The Kingdom of Saudi Arabia has outlined a strategy to achieve diversification through its “Vision 2030” plan, pursuing an aggressive program of economic reform to create an enabling environment for foreign and domestic investment. These reforms have resulted in an increase of all tracked measures on the World Bank’s 2020 “Ease of Doing Business” Index, including 3rd in the world for protecting minority investors and top quartile rankings for starting a business and registering property. In addition, several more sectors have been opened for foreign investment and a high-level standing committee has recently been set up to evaluate and allow foreign investments in strategic and sensitive sectors as well.

AlGhazzawi & Partners has been advising domestic and foreign investors for over 50 years and we fully understand the commercial aspects and objectives of such investments. We work closely with our clients to create strategies for market entry, including new business structuring, mergers and acquisitions, franchising/distribution agreements, financing arrangements, Intellectual property protection, taxation, employment, and real estate acquisition.

Learn More

Business Structuring

Economic reforms in Saudi Arabia have unleashed a new era of Saudi entrepreneurship and a sharp increase in direct foreign investment in the form of new market entrants, mergers, acquisitions, and partnerships. While the opportunities are exciting, adequate diligence and prudence must be applied to how all new ventures are structured. Failure to do so can have serious and unexpected consequences for any business. The Kingdom is continuously codifying business activities and integrating licensing and incorporation services to simplify and streamline access, and this necessitates that existing businesses also align with the changes.

Our corporate practice is a major practice area of our firm and encompasses the entire spectrum of corporate law. With over 50 years of experience, we have guided thousands of emerging and growing entities, multinational, investment banks, private equity funds, and family businesses on the successful formation of new businesses and the ideal corporate structures that are most suitable for their ventures. This extensive know-how allows us to offer our clients practical and informed insights that are compliant with both Sharia practices and the rapidly evolving regulatory environment in the Kingdom.

Learn More

Capital Markets

Understand the Kingdom of Saudi Arabia's capital market regulations, renowned as among the most advanced and sophisticated in the MENA Region.

As an established legal practice, we specialize in advising a diverse clientele, including domestic and international corporations, institutions, investment banks, and funds, on a wide spectrum of capital market transactions and the relevant regulatory compliance matters.

With a wealth of expertise in this dynamic field, we are dedicated to providing tailored guidance and support to help our clients navigate the complexities of the Kingdom’s regulations with confidence and success.

Learn More

Competition & Anti-Trust

Recent economic reforms in the Kingdom of Saudi Arabia have resulted in an influx of direct foreign investment and a flurry of new merger and acquisition activity. In response, Saudi Arabia’s General Authority for Competition (GAC) has updated its merger control regime and increased enforcement activity to discourage and penalize anti-competitive practices in the Kingdom.

As the leading mergers and acquisitions law firm in Saudi Arabia, Al-Ghazzawi and Partners regularly advises domestic and international clients on competition, World Trade Organization, and anti-trust matters in the Kingdom. Our 50+ year history coupled with our stellar reputation amongst regulatory authorities allow us to gain clarity on the rapidly evolving competition and anti-trust laws in the Kingdom which we immediately utilize to the benefit of our clients.

Learn More

Contracts

Contracts are the foundation of law. You might have need of contracts on a wide range of issues, including technology transfer, licensing, intellectual property use, and project financing. It is essential that you ensure they reflect your best interests and are mutually understood by all parties. Strong agreements make business simpler, more productive, and more secure.

Al-Ghazzawi and Partners has a highly experienced and insightful commercial contracts team that can assist your business in any commercial matter. Our legal practice is fully equipped to draft, review, and advise your team about contracts on major projects, over valuable goods and properties, and regarding more complex legal arrangements. We also have extensive expertise and knowledge surrounding the tradition of contract law in the Kingdom of Saudi Arabia and how that may affect your domestic or international interests.

Learn More

Dispute Resolution

When commercial and corporate disputes arise, using options that avoid litigation can significantly reduce both time to resolution and legal fees. It can also help preserve the relationship between opposing parties. Alternative Dispute Resolution (ADR), which refers to solving disputes outside the court system (and includes negotiation, mediation, and arbitration) has gained significant importance in the Kingdom as the preferred method to resolving business disputes.

ADR has been a cornerstone of our practice for more than 50 years. Having successfully represented domestic and international clients in hundreds of high-profile, high-stake matters in the Kingdom, our lawyers are highly qualified ADR practitioners who are widely considered leaders in their field, and practice in accordance with international and professional standards in Arabic and/or English. As a firm, we are committed to helping clients prevent and resolve disputes by applying innovative alternatives to litigation.

Learn More

Employment

Employment laws and regulations governing labour relations are rapidly shifting in the Kingdom of Saudi Arabia. The “Saudization” system (i.e. Nitaqat) that requires employers in the private sector to hire a minimum percentage of Saudi nationals has been underway for several years. More recently, the Saudi Arabian Ministry of Human Resources and Social Development launched a Labour Reform Initiative (LRI) to replace the existing sponsorship system (i.e. kafala), which had previously placed significant constraints on foreign worker job mobility in the Kingdom.

Al-Ghazzawi and Partners can help your business successfully navigate the changing employment landscape. Throughout our five decades of practice, we have strongly believed that maintaining sound employer-employee relations is critical to our clients’ success. Labour disruptions, high employee turnover, fraud, and negligence can exact a great toll on a business – as does being offside with labour regulations.

Learn More

Environmental

Environmental regulations are becoming more stringent in the Kingdom of Saudi Arabia. Policies enacted to control pollution and contamination are placing ever-increasing environmental governance demands on every sector of the economy.

Clients depend on our guidance to understand the implications of environmental policies on their operation. In addition to providing advice on all aspects of environmental law in the Kingdom, Al-Ghazzawi and Partners also counsels on Environmental, Social, and Governance (ESG) factors that affect our clients. As more stakeholders take note of a company’s ESG practices, forward-thinking businesses recognize that non-compliance can expose them to serious liability and impact their standing with customers, investors, and regulatory authorities.

Learn More

Insurance

The insurance industry has gained greater prominence in the Kingdom of Saudi Arabia after the opening of the sector to foreign entities and the resulting consolidation that followed. Furthermore, the industry experienced rapid growth when vehicle and medical insurance became mandatory in the Kingdom and as new economic reforms encouraged foreign investment and economic diversification. As a result, the laws and regulations governing commercial insurance have become more complex in order to govern relations between participants.

With over 50 years of experience, Al-Ghazzawi and Partners is considered the leading Saudi law firm for resolving complex insurance disputes. We have been active participants in the growth of this sector with broad experience representing and advising insurers, policyholders, and other stakeholders on commercial insurance agreements and coverage disputes.

Learn More

Intellectual Property

Like other jurisdictions, there is an increased focus on the protection of intellectual property in Saudi Arabia and encompasses all types of IP rights.

Trademark and patent infringement of successful brands has been an intractable issue in Saudi Arabia and the region. Protecting Intellectual Property (IP) rights has become of strategic importance in fulfilling the Kingdom of Saudi Arabia’s “Vision 2030” ambitions. The government recognizes that IP rights play a central role in fueling creativity, innovation, and business investment – leading to a more diversified competitive domestic economy as well as making the business environment for foreign entrants more inviting and secure. As a result, Saudi Arabia’s IP regulatory landscape is rapidly changing, and new ways and means are being adopted to ensure the protection of IP rights in line with international treaties, protocols, and conventions to which Saudi Arabia is a party.

Our IP Practice Team has gained wide recognition in contesting the use of internationally established trademarks, trade names, copyrights, inventions, and proprietary know-how under various international treaties. We have also successfully prevented patent infringement and the sale of counterfeit goods in the Kingdom.

Learn More

Litigation

The unique nature and breadth of the judicial system in the Kingdom of Saudi Arabia requires practitioners with a deep knowledge of Sharia law and a profound understanding of the tenets of Islamic jurisprudence.

Our robust Litigation Team is skilled at settling business disputes throughout all levels and types of Saudi courts. Perhaps, there is not an area, industry, or regulatory issue in this domain that we have left untouched during our long practice spanning over four decades.

Our ability to understand complex domestic and international commercial disputes combined with our precedent-setting record and prowess in the courtroom has earned us a formidable reputation among our peers and throughout the business community in the Region. Our firm’s involvement often influences opponents to quickly settle their disputes with our clients.

Learn More

Mergers & Acquisitions

Major economic reforms in the Kingdom of Saudi Arabia have brought on an influx of direct foreign investments and a marked increase in merger and acquisition activity. These sensitive transactions demand rigorous due diligence and can attract the attention of Saudi competition and anti-trust agencies looking to prevent monopolistic or oligopolistic practices.

AlGhazzawi & Partners is widely considered to be the leading M&A law firm in Saudi Arabia. With over 50 years of experience focusing on corporate and commercial law, our team has handled some of the largest and most complex M&A transactions in the Kingdom. Whether you are a potential partner, acquirer, or readying your business for sale, our legal team has repeatedly demonstrated its robust business acumen to the advantage of domestic and foreign-owned clients alike across all key market sectors.

Learn More

Public Projects & PPP

Massive investment in the Kingdom of Saudi Arabia’s infrastructure is underway, presenting new opportunities for domestic and foreign-owned companies to participate in the estimated USD $492 billion spending plan over the next 25 years. Needless to say, involvement in public projects of this scale requires robust legal support for understanding public tendering requirements, Public-Private Partnership (PPP) projects, procurement regulations, dispute resolution mechanisms, and other legal matters as well as a review of contracts for such projects.

AlGhazzawi & Partners is well-positioned to provide the legal expertise needed for large-scale government infrastructure works and other projects. Thanks to our long drawn experience of over 50 years and huge knowledge base of the local laws and regulatory frameworks covering public procurement policy, concession arrangements in different areas, real estate expropriation for the public good, and Public-Private Partnerships (PPP), we have been guiding clients in navigating through the maze of regulatory, legal and business processes in a seamless manner.

With a full range of business legal services and a highly experienced team, we have the foresight and relevant insights to help you conduct business in the Kingdom with confidence and increase your chances of success.

Learn More

Real Estate & Construction

Commercial real estate and construction projects are some of the most common economic activities in the Kingdom of Saudi Arabia. Issues often arise due to complex ownership structures, changing legislation, project delays, bankruptcies before completion of projects, and contractual disputes.

AlGhazzawi & Partners is well-positioned to provide legal support covering all aspects of commercial real estate and construction projects. For over 50 years, we have been advising investors, developers, government bodies, investment funds, REITs, financial institutions, landlords, and tenants on all aspects of real estate and construction law. Our team has the foresight and relevant insights to help you conduct business in the Kingdom with confidence and increase your chances of success.

Learn More

Tax

Saudi Arabia is a unique tax jurisdiction where companies based in the Kingdom are generally subject to two different tax regimes - Zakat and/or Income Tax - based on the nationality of their owners. Companies are also subject to Value-Added Tax (VAT), real estate tax, customs and duties, withholding taxes on foreign entities, and must address the issue of double taxation.

With recent reforms and increased use of IT, the Saudi tax authority is aiming to increase compliance with tax laws and regulations, reduce tax evasion, and improve the Kingdom’s alignment with international standards. These reforms include new auditing standards that require greater accountability and requirements to file detailed returns in a timely manner. They also include recent e-invoicing requirements aimed to improve the efficiency and transparency of the filing process for taxpayers.

AlGhazzawi & Partners understands the complexities of the Saudi tax system and how it applies to your unique situation. Sophisticated legal support is essential for you to navigate changes to tax law, regulation, auditing, and filing standards. For over 50 years, our tax practice has assisted clients with domestic and international corporate tax planning, litigation of tax-related cases, , and representation on industry and client-specific issues.

Learn More