RESTRICTED
WORLD TRADE WT/ACC/SAU/5
11July1996
ORGANIZATION(96-2706)
Original: English
ACCESSION OFTHE KINGDOM OFSAUDI ARABIA
Supplementary Memorandum ontheForeign Trade Regime
TheMinister ofCommerce oftheKingdom ofSaudi Arabia hassubmitted thefollowing
Supplementary Memorandum onTrade Related Intellectual Property Rights andontheTrade Related
Services Regime.
_____________
Table ofContents
Item Page No.
TRADE-RELATED INTELLECTUAL PROPERTY REGIME
1. General 3
(a) Intellectual Property Policy 3
(b) Responsible Agencies 3
(c) Membership inInternational Conventions and 3
Regional orBilateral Agreements
(d) Application ofNational andMost Favoured 3
Nation Treatment
(e) Fees 3
2. Substantive Standards ofProtection
(a) Copyright andRelated Rights 4
(b) Trade Marks 4
(c) Geographical Indications 5
(d) Industrial Designs 5
(e) Patents 5
(f) Plant Variety Protection 5
(g) Layout Designs ofIntegrated Circuits 6
(h) Requirements onUndisclosed Information 6
3. Measures toControl Abuse ofIntellectual Property Rights 6
4. Enforcement 6
5. Laws, Decrees, Regulations andOther Legal Acts 7
6. Statistical Data 8WT/ACC/SAU/5
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TRADE-RELATED SERVICES REGIME
1. General 8
2. Policies Affecting Trade inServices 9
(a) Government Departments, Agencies, orother
Bodies withAuthority 9
(b) Judicial, Arbitral orAdministrative Tribunals
Affecting Trade inServices 9
(c) Qualification Requirements andProcedures 9
(d) Monopolies andExclusive Service Suppliers 9
(e) Safeguard Measures 9
(f) International Transfers andPayments 9
(g) Capital Transactions 10
(h) Government Procurement 10
(i) Aid,Grants, TaxIncentives orPromotion Schemes 10
3. Market Access andNational Treatment 10
(a) Limitations ontheNumber ofServices Suppliers 10
(b) Limitations ontheTotal Value ofService
Transactions orAssets 11
(c) Limitations ontheTotal Number ofOperations or
Total Quantity ofOutput 11
(d) Limitations ontheNumber ofNatural Persons
Employed inParticular Sectors 11
(e) Restrictions on,orRequirements of,Specific
Types ofLegal Entities 11
(f) Limitations ontheParticipation ofForeign Capital
(g) Measures Providing forLessThan National Treatment 12
4. Exceptions toMost Favoured Nation Treatment 12WT/ACC/SAU/5
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TRADE-RELATED INTELLECTUAL PROPERTY REGIME
1.General
(a) Intellectual Property Policy
1. Saudi Arabia isamember oftheWorld Intellectual Property Organization andsupports its
objectives, including theprotection ofintellectual property. Inrecent years, theKingdom hastaken
anumber ofsteps toincrease theprotection available toowners ofintellectual property, including
trademarks, patents, andcopyrights. TheGovernment willcontinue toprotect intellectual property
rights within theKingdom andtomeetitsinternational obligations.
(b) Responsible Agencies
2. TheMinistry ofCommerce isprimarily responsible forimplementing theTrade Marks Law.
TheKing Abdulaziz CityforScience andTechnology isprimarily responsible forimplementing the
Patents Law, andwillimplement theproposed Industrial Designs Law. TheMinistry ofInformation
isprimarily responsible forimplementing theCopyright Law. TheBoard ofGrievances isakey
institution intheenforcement ofintellectual property rights protection. TheBoard isthehighest
administrative tribunal intheareaofenforcing intellectual property rights.
(c) Membership inInternational Conventions andRegional orBilateral Agreements
3. Saudi Arabia isamember oftheWorld Intellectual Property Organization. Itisalsoaparty
totheUniversal Copyright Convention andtheArabCopyright Convention aswellastheGCCs Unified
Patent regulations.
(d) Application ofNational andMost Favoured Nation Treatment
4. Saudi Arabia extends national treatment toforeigners withregard tointellectual property rights.
Saudi Arabia accords Most Favoured Nation Treatment withrespect toallintellectual property rights
except trade marks.
5. TheLawfortheProtection ofCopyrights, protects theworks ofSaudi nationals andforeigners
which arepublished, performed ordisplayed forthefirsttimeinSaudi Arabia ortheworks ofSaudi
nationals which arepublished, performed ordisplayed inaforeign country forthefirsttime. Asa
signatory totheUniversal Copyright Convention, Saudi Arabia protects foreign nationals whose works
arepublished, performed ordisplayed inaforeign country. Asaresult, theyenjoy thesame levelof
protection asnationals ofSaudi Arabia, i.e.national treatment.
6. TheTrade Marks Law, stipulates theconditions forprotecting trademarks thatareregistered
inSaudi Arabia. Applications fortrademarks registration arefiledintheTrademarks Office inthe
Ministry ofCommerce bySaudi national individuals orcorporations, foreigners whoareresiding in
Saudi Arabia andauthorized topractice anycommercial orvocational activity, non-resident foreigners
onthebasisofreciprocity, andbypublic organizations. Inthecaseofnon-residents, theymustappoint
alocalrepresentative.
7. ThePatents Law, makes nodistinction between Saudis andnon-Saudis inrespect ofgranting
patents.
(e)Fees
8. Article 47oftheTrade Marks Lawliststhefollowing fees(subject tochange):WT/ACC/SAU/5
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a) Onethousand Riyals for:
filing anapplication forregistration ofatrade mark inrespect ofoneclass;
filing anapplication forregistration ofagroup (joint) trade mark inrespect ofoneclass;
application forsearch ofatrade mark inrespect ofoneclass;
access totheRegister ofatrade mark inrespect ofoneclass;
every copyextracted fromtheentries oftheRegister regarding atrade mark inrespect ofone
class;
application fortransmission orassignment ofatrade mark inrespect ofoneclass;
application foralicense tousethemarkinrespect ofoneclass, andformarking apledge thereon
inaccordance withArticles 36and40oftheLaw;
every amendment oraddition toamark inrespect ofoneclassinaccordance withArticle 22
oftheLaw;
application foraddition toormodification ofastatement forwhich afeeisnotfixedinrespect
ofamark foroneclass.
b) Three thousand Riyals for:
filing ofanapplication forprovisional protection ofatrade mark inrespect ofoneclass;
registration ofatrade mark;
renewal ofregistration ofatrade mark inrespect ofoneclass;
renewal ofregistration ofagroup (joint) trade mark inrespect ofoneclass.
9. Feesforpatents forindividuals areasfollows: patent application SR400;patent publication
andgranting SR500;annual charge SR400;amendment oraddition SR100;change ofownership
SR200;certified copies ofpatent SR50;granting ofcompulsory license SR4,000; registration of
license contract SR400;extension ofpatent forms SR200.Feesaredoubled forfirms.
2.Substantive Standards ofProtection
(a)Copyright andRelated Rights
10. Copyright andrelated rights areprotected under theLawfortheProtection ofCopyrights,
approved in1990 byRoyal Decree M.11 of1410. Itprotects authors ofawidevariety ofexpressive
instruments, including books, paintings, motion pictures, audio recording, andcomputer programs
from infringement andfinancial exploitation oftheirworks without permission.
11. Under Article 10oftheCopyrights Law, theMinistry ofInformation mayauthorize the
publishing andcopying ofworks foreducational, cultural, instructional orscientific purposes after
thelapse ofthree years torunfromthedateofthefirstpublication ifitisestablished thattheauthor
oranyoneacting forhimhaswithout lawful cause refused topublish orcopythework. TheMinistry
shalldetermine theconditions subject towhich theauthorization topublish ortocopyisgranted.
12. Under Article 24oftheCopyrights Law, protection ofthecopyright oftheauthor (including
computer programs) tothework willcontinue fortheduration ofhislifeandforaperiod of50years
thereafter. Theprotection period ofthecopyright willbe25years torunfromthedateofpublishing
insofarasregards sound andaudio-visual works, photographs andtheapplied artistic works (bethey
craftsmanship orindustrial) aswellasworks which arepublished without mentioning thename ofthe
author. Calculation oftheperiod inthiscasewillcommence from thedateofthefirstpublication
ofthework regardless ofre-publication.
(b) Trade Marks
13. Thecurrent Trade Marks Law, which wasapproved in1984 byRoyal Decree M/5of1404,
stipulates theconditions forprotecting trade marks thatareregistered inSaudi Arabia. ApplicationsWT/ACC/SAU/5
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fortrademarks registration arefiledintheTrademarks Office intheMinistry ofCommerce. Adecision
withrespect totheapplication forregistration isrendered within thirty daysfromthesubmission date,
provided ithassatisfied theterms andconditions provided forintheLawandtheImplementing
Regulations.
14. Under Article 26oftheTrade Marks Law,therights oftheperson resulting fromtheregistration
ofthemark shallcontinue tobevalid foraperiod oftenyears andforother similar periods, ifan
application forrenewal oftheregistration issubmitted. Theowner ofthemarkmaysubmit anapplication
forrenewal during thelastyearoftheperiod ofprotection inaccordance withtheconditions andterms
stipulated intheLawandintheImplementing Regulations. Hemaynotapply tointroduce anychange
tothemark ortothelistofproducts orservices inrespect ofwhich themark isregistered. However,
products orservices maybestruck offthelist
15. Under Article 29oftheTrade Marks Law, theregistration ofthemark maybedeleted if:
a) theowner thereof hasfailed touseitforaperiod offiveconsecutive years, unless
hehasalawful excuse;
b) theregistration ofthemark waseffected inviolation ofpublic order andmorals;
c) themark wasregistered onthebasis offraud orfalseparticulars.
(c)Geographical Indications
16. Protection forgeographical indications areincorporated intheTrade Marks Law.
(d)Industrial Designs
17. Protection forindustrial designs willbecovered byaproposed Industrial Designs Lawwhich
willbeimplemented bytheKing Abdulaziz CityforScience andTechnology.
(e)Patents
18. ThePatents Law, approved in1989 byRoyal Decree M.38 of1409, aimstosecure, within
Saudi Arabia, thefullprotection ofinventions. TheKingAbdulaziz CityforScience andTechnology
isresponsible forgranting andprotecting patents. Applications forgranting patents shallbefiledon
aspecial formatthePatent Office oftheKingAbdulaziz City. TheLawmakes nodistinction between
Saudis andnon-Saudis inrespect ofgranting patents.
19. Under Article 27ofthePatents Law, thepatent ofinvention shallbevalid for15years. The
King Abdulaziz CityforScience andTechnology mayattherequest ofthepatent holder extend the
termofvalidity thereof foranadditional fiveyears provided theapplication forsuchanextension is
submitted within thelastyearoftheoriginal termandatleast60daysbefore theexpiration date.An
annual feemust bepaidatthebeginning ofevery year.
20. Under Article 34ofthePatents Law, ifthetimelimitprescribed forintheLaw(initially two
years withthepossibility ofanadditional twoyears) hasexpired andtheinvention hasnotbeenfully
industrially exploited within theKingdom bythepatent holder, theKing Abdulaziz CityforScience
andTechnology may, uponapplication, issueacompulsory license toanother person whoestablishes
hiscapability tomake fulluseoftheinvention.
(f) Plant Variety Protection
21. Plant variety protection isnotcurrently covered bythePatents Law.WT/ACC/SAU/5
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(g) Layout Designs ofIntegrated Circuits
22. Rights relating todesign (topographies) ofintegrated circuits arenotcurrently covered bythe
Patents Law.
(h)Requirements onUndisclosed Information
23. Rights relating totheprotection ofundisclosed information arecovered byIslamic Shariah
andcertain specific laws. Article 229oftheCompanies Lawprovides forpenalties foranygovernment
official whodivulges, toother thanthecompetent authorities, thecompany secrets towhich hehad
access byreason ofhisduties. Article 57ofthePatents Lawprovides forsimilar protections.
3.Measures toControl Abuse ofIntellectual Property Rights
24. ForCopyrights, please seeparagraph 11.
25. ForTrademarks, please seeparagraph 15.
26. ForPatents, please seeparagraph 20.
4.Enforcement
27. Asdescribedbelow,theBoardofGrievancesisakeyinstitutionintheenforcementofintellectual
property rights protection. TheBoard isthehighest administrative tribunal intheareaofenforcing
intellectual property rights. Itadjudicates civilactions andawards provisional relief andfinalremedies.
Italsohears criminal cases anddetermines penalties tobeimposed. TheBoard actsasanappellate
body forlower administrative committees. TheBoard ’sowndecisions arefinal.
28. Fortrademarkviolations,theBoardofGrievanceshasthepowertoadjudgeallcivilandcriminal
cases. TheMinistry ofCommerce areassigned withthetaskofchecking offenses, receiving complaints
andconducting investigations. Whenever there isevidence ofanoffense, thecaseisreferred tothe
legal department intheMinistry ofCommerce tobring legal action against theoffender. Also, the
proprietor ofamark may,atanytime, evenbefore acivilorcriminal caseisinitiated, obtain, pursuant
toapetition andproduction ofadeposit, anorder from theBoard ofGrievances forconfiscation of
thealleged infringing products. TheTrade Marks Lawprovides forfines, imprisonment, andclosure
ofpremises ofviolators. Italsoprovides forcivildamages.
29. Forpatent violations, astanding committee, composed offivemembers three withlegal
background andtwowithtechnical expertise, isvested withthepower tohearalldisputes andcontests
ofthedecisions issued inrespect ofthepatents; italsohasthepower tohearthecriminal cases which
result fromtheviolation ofthePatents Law anditsimplementing regulations. Anappeal against the
decision ofthecommittee canbemade totheBoard ofGrievances. Under Article 22ofthePatent
Law, theholder ofthepatent shallbeentitled tocommence proceedings before theCommittee against
anyperson whoexploits hisinvention within theKingdom without hisapproval. Exploitation ofthe
product isdeemed tobemanufacturing, importing, offering itforsaleandtheusethereof, aswell
asthestocking ofasimilar product forthepurpose ofoffering itforsaleandtheusethereof. The
holder ofapatent pertaining tothemethod ofmanufacture ofacertain product shallhavethesame
right inregard tothatwhich isproduced directly byusing thisprocess. TheCommittee canorder
payment ofcompensation andfinesandcantakeanyother measures asitdeems expedient toavoid
damage resulting from theviolation.
30. With regard tocopyright violations, astanding committee composed ofnotlessthanthree
members, oneofwhom must bealegal consultant, hasbeen given theauthority tohearallegedWT/ACC/SAU/5
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infringements ofeither acivilorcriminal nature. Under Article 28oftheCopyright Law, thecommittee
may, pursuant toanapplication bytheauthor owner oftheright, order theconfiscation ordestruction
ofallthecopies orphotographs oftheworkwhich itconsiders tohavebeenmade bywayofinfringement
upon theauthor 'sright. aswellasthematerials which aredestined fororusedinthecommittee of
theoffense ortobedisposed ofinthemanner itdeems expedient. Aprovisional order mayalsobe
issued tosuspend thepublishing orthedisplaying ofthework ortoconfiscate thecopies ortoconfiscate
therevenue resulting from thepublication orthedisplayed work ormayimpose suchother interim
orders asitdeems necessary forprotection oftheauthor 'srights untilthefinalresolution ofthecase.
Penalties assessed oninfringes include fines, closure offacilities andmonetary compensation. Appeals
ofadministrative decisions can,under certain circumstances, bemade totheBoard ofGrievances.
31. TheMinistry ofInformation hasissued many disciplinary circulars forthepurpose ofenforcing
protection ofcopyrights. These circulars havecovered allcommercial establishments which useor
sellaudio, video andwritten intellectual works, computer programs, and/or computer game programs,
emphasizing thenecessity ofusing orselling theoriginal copies. Thecirculars havealsobeensent
toresidential compounds, hotels, banks, commercial companies andengineering offices. TheMinistry
makes unannounced inspections tocheck whether entities orindividuals useorselltheoriginal copies
intheappropriate way.TheMinistry investigates complaints andapplies theappropriate legalpenalty
against entities orindividuals whoarefound tohaveviolated therulesandregulations ontheprotection
ofcopyrights, e.g.fines, suspension ofoperations.
32. Inaddition, under theImplementing Regulations totheLawtoCombat Commercial Fraud,
anAdjudication Committee hasbeengiven theauthority tohearalleged violations ofthelawofeither
acivilorcriminal nature. Appeals ofadministrative decisions can,under certain circumstances, be
made totheBoard ofGrievances.
33. Asshown above, Saudi Arabia provides anextensive range ofrelief fortheprotection of
intellectual property rights. PartVIoftheCopyright ofAuthors Lawallows forinjunctive relief,
damages,seizureanddestructionofinfringinggoods,provisionalreliefandcriminalsanctions--consistent
withtheWTO Agreement onTrade Related Intellectual Property Rights-- forviolations involving
copyrights. PartVIIIoftheTrade Marks LawandArticle 45oftheimplementing regulations allows
forinjunctive relief, damages, seizure anddestruction ofinfringing goods, border relief, provisional
reliefandcriminalsanctions--consistentwiththeWTOAgreementonTradeRelatedIntellectualProperty
Rights--for violations involving trademarks. Articles 22and47ofthePatents Lawallows forinjunctive
relief,damages,seizureanddestructionofinfringinggoods,borderrelief,provisionalrelief,andcriminal
sanctions--consistent withtheWTO Agreement onTrade Related Intellectual Property Rights--for
violations involving patents. Inaddition, border relief isprovided forunder theCustoms Law.
5. Laws, Decrees, Regulations, andOther Legal Acts
34. Inaccordance withIslamic Shariah, legalactsrelating tointellectual property rights include
thefollowing:
TheTrade Marks Law
ThePatents Law
TheLawfortheProtection ofCopyrights
Royal Decree No.M/12 of1414 onSaudi Arabia ’sAdherence totheUniversal Copyright
Convention
Companies Law(thatsection which pertains toundisclosed information)
LawtoCombat Commercial Fraud (guards against goods violating Trade Marks Law)
Customs Law(provides forborder measures forgoods violating Saudi law)
Rules andProcedures Before theBoard ofGrievances (covers judicial procedures)WT/ACC/SAU/5
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6.Statistical Data
35. PATENT STATISTICS
YearFiled Applications Granted Patents
Total Non-Saudi Saudi Total Non-Saudi Saudi
1990 455 439 16 0 0 0
1991 519 492 27 0 0 0
1992 626 605 21 0 0 0
1993 750 729 21 0 0 0
1994 720 687 33 0 0 0
1995 746 718 28 0 0 0
1996* 406 393 13 4 3 1
*Datafor1996 isuptoJuly1996.
TRADE MARKS STATISTICS
Year Filed Applications Granted Registrations
1990 2250 2072
1991 2665 2460
1992 3245 2967
1993 3393 2948
1994 3632 2979
1995 2984 2074
TRADE-RELATED SERVICES REGIME
1.General
36. Saudi Arabia ’sservice sector regime isbased onfree-market principles. Saudi Arabia isone
oftheleading importers ofcommercial services. Itwasthetwenty third biggest importer in1995,
withanimport ofUS$12.5 billion. Saudi Arabia ’sexport ofcommercial services isrelatively very
small, thus, itabignetimporter.
37. Saudi Arabia hasalsobeenveryliberal inrespect tothemovement ofnatural persons. The
number offoreign workers andprofessionals inSaudi Arabia, in1415, wasmore than4million, drawn
from various countries.
38. Company formation andoperation aregoverned bytheCompanies Law. Partnerships are
governed bytheProfessional Partnerships Law. International participation inthevarious service sectors
isgoverned bytheInvestment ofForeign Capital Regulation. Inaddition, therearesector specific laws
andregulations including thefollowing: TheBanking Control Law;Resolution No.53Dated 24.3.1403
regarding maritime services; Royal Decree No.M/58 of1407 approving thePrivate Medical
Establishment Law; Implementing Regulations totheRegulation ofTechnical Institutes andNational
Occupational Centers; Ministerial Resolution No.1/1/4/8/10/1393 of29.6.1400 and1/1/4/8/10/2314
of12.8.1406 Regarding Regulation ofTourism andTravel Agencies andCompanies Engaged inAir
Transport; Ministerial Resolution No.264of16.9.1402 Concerning Organization ofthePractice of
theProfession ofEngineering Consultancy; LawofCertified Accountants andtheImplementing
Regulations oftheAccountants Law; Ministerial Resolution Number 1190 of1402 Pertaining totheWT/ACC/SAU/5
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Regulation ofCarrying ontheProfession ofLegal Consultancy; andLawConcerning theCarrying
onoftheProfession ofPharmacy andTrading inMedicaments andMedical Preparations.
2.Policies Affecting Trade inServices
(a) Government Departments, Agencies orother Bodies withAuthority
39. Rules concerning temporary residence inSaudi Arabia byforeigners isgoverned bytheLaw
ofResidency which isenforced bytheMinistry ofInterior. Inaddition, theMinistry ofLabor approves
applications forthepresence offoreigners whowork oraregiven license topractice work intheprivate
sector. Withregard toforeign capital, whether inajointventure orwholly owned, itmustbeapproved
bytheForeign Capital Investment Committee under thechairmanship oftheMinistry ofIndustry and
Electricity. Inaddition, theMinistry ofCommerce hasauthority withregard tomost business,
engineering,distribution,environmentalandtravel-relatedservices.TheMinistryofHealthhasauthority
overmost health related andsocial services. TheMinistry ofEducation hasauthority overmost
educational services. TheSaudi Arabian Monetary Agency hasauthority overmostfinancial services.
TheMinistry ofPosts, Telegrams andTelegraphs hasauthority overcommunications services. The
Ministry ofCommunication hasauthority overlandandseatransportation. TheMinistry ofDefense
andAviation hastheauthority overcivilaviation.
(b)Judicial, Arbitral orAdministrative Tribunals Affecting Trade inServices
40. Saudi Arabia provides forawiderange ofjudicial, arbitral andadministrative procedures with
respect totradeinservices. TheKingdom hasadministrative procedures forthereview ofadministrative
decisions affecting trade inservices. Suchdecisions areappealable totheBoard ofGrievances under
theCouncil ofMinisters Resolution No.190of16.11.1409 Concerning Rules andProcedures tobe
Followed bytheBoard ofGrievances andtheBoard ofGrievances Law. Commercial disputes are
generally covered bytheBoard ofGrievances andsome other standing aswellasadhoccommittees.
(c) Qualification Requirements andProcedures
41. With regard toqualification requirements forforeign service suppliers within Saudi Arabia,
Chapter 3oftheLabor andWorkers Regulations states thatworkers must possess theoccupational
proficiencies oracademic qualifications needed inthecountry.
(d) Monopolies andExclusive Service Suppliers
42. Thegovernment istheexclusive supplier forcertain services suchastelevision andradio
transmission, basic telecommunications, public utilities, railroad services.
(e) Safeguard Measures
43. Saudi Arabia doesnotatpresent have anylegislation/regulations specifically referring to
safeguard measures astheyapply totrade inservices.
(f) International Transfers andPayments
44. Saudi Arabia maintains norestrictions oninternational transfers andpayments forcurrent
transactions ofservices byresidents ornonresidents.WT/ACC/SAU/5
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(g) Capital Transactions
45. There arenoexchange restrictions oncapital receipts orpayments byresidents ornonresidents.
With regard torestrictions ontheinflow ofcapital, please seeparagraphs 59,60below.
(h) Government Procurement
46. TheGovernmentPurchasesLawgovernstheprocurementbygovernmentalagenciesofservices.
Itsmostsignificant preference requirement isthatqualified Saudi nationals andwholly Saudi-owned
firms begiven priority forcontracts, followed bymixed Saudi-foreign establishments, andfinally,
wholly-foreign owned firms.
47. Ministerial Resolution No.124of29.5.1403 states that:
a) Allnon-Saudi contractors mustassign notlessthan30percent oftheworks included
intheircontract towholly owned Saudi companies;
b) Allcontractors areobliged topurchase thetools andequipment which theyprocure
forperformance oftheircontracts from Saudi agents forthese tools andequipment
inSaudi Arabia.
c) Contractors must obtain thefollowing services from localSaudi establishments:
transportation services forgoods andservices within Saudi Arabia, ifthe
contractor willnotperform thisservice byhimself directly byequipment owned
byhimandwithpersonnel directly working forhim.
banking andinsurance services.
services fortheleasing andpurchase oflandandbuildings.
catering services andsupply offoodstuffs.
48. Themarket effects ofSaudi Arabia ’sProcurement lawarelimited. Saudi Arabia ’sproduction
baseforservices, aswellasformanufacturing andagriculture, isnotwide. Thus, while there isa
degree ofpreference forSaudi contractors andsub-contractors, thegoods andservices theyfurnish
togovernment contracts willbepredominantly offoreign origin.
(i) Aid,Grants, Subsidies, TaxIncentives orPromotion Schemes
49. Therearefewprovisionsconcerningaid,grants,domesticsubsidies,taxincentivesorpromotion
schemes thatdirectly affect tradeinservices. Intheareaoflabor, thegovernment doesencourage and
promote theuseofdomestic, asopposed toforeign labor. Thetwoprimary means usedtoincrease
theratioofdomestic toforeign laborservices are:(1)increasing thelevelofeducation, and(2)increasing
theleveloftechnical proficiency. Thegovernment provides financing toimprove thequantity andquality
ofeducational services, including technical schools, inorder tofurther theobjective ofgreater use
ofdomestic labor.
50. With regard totaxincentives, foreign business enterprises maybenefit from taxholidays of
uptofiveyears.
3.Market Access AndNational Treatment
(a) Limitations ontheNumber ofService Suppliers
51. Apart fromfewactivities fromwhich foreign enterprises areexcluded (seeparagraph 60),there
arenoquantitative limits onforeign service suppliers.WT/ACC/SAU/5
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(b) Limitations ontheTotal Value ofService Transactions orAssets
52. There arenolimitations onthetotalvalue ofservice transactions orassets.
(c) Limitations ontheTotal Number ofOperations orTotal Quantity ofOutput
53. With theexception ofservice sectors reserved forthestate, there arenolimitations onthe
totalnumber ofservice operations oronthetotalquantity ofservice output.
(d) Limitations ontheTotal Number ofNatural Persons Employed inParticular Sectors
54. Asamatter ofprinciple, since work isconsidered aSaudi citizen ’sright, aforeigner would
notbeemployed when todosowould displace aSaudi worker. Inapplying thisprinciple, theLabor
andWorkers Regulations establish, asageneral rule, thatanyenterprise, Saudi orforeign owned,
shallensure thatthe“percentage oftheSaudi workers engaged bytheemployer shallnotbelessthan
75percent ofhistotalworkforce ”.However, theRegulations alsoprovide theMinister ofLabor with
theauthority totemporarily reduce therequired percentage incircumstances “where Saudi workers
qualifications arenotavailable ”.
55. Foreign workers arerequired toobtain work permits fromtheMinistry ofLabor. Applications
forpermits aretobeaccompanied byasubmission from theproposed employer confirming the
non-availability ofqualified Saudis forthework andaguarantee ofrepatriation attheconclusion of
theapplicant ’scontract.
56.Inallserviceactivities,irrespectiveofownership,enterprisesareobligatedtoreservecertainpositions
forSaudis,including;personnelmanagers,treasurers,civiliansecurityguards,andtransactionfollow-up
clerks togovernment departments.
(e) Restrictions on,orRequirements of,Specific Types ofLegal Entities
57. There areeightpossible forms ofbusiness companies within theKingdom. Theyare,asspelled
outintheCompanies Law, thegeneral partnership; limited partnership; partnership limited byshares;
limited-liabilitypartnership;companywithvariablecapital;joint-stockcompany;co-operativecompany;
andjoint-venture company. Eachofthese forms ofcompanies isavailable toforeign investors, subject
totheInvestment ofForeign Capital Regulation. Foreign corporations arealsoallowed toestablish
branches intheKingdom, subject totheInvestment ofForeign Capital Regulation andother applicable
legalacts.
58. Activities offinancial firms aregoverned bytheBanking Control Law. Under Article 2of
theBanking Control Law, anynatural orjuristic person musthavealicense tocarry on,intheKingdom,
banking business. Under Article 3oftheBanking Control Law, anational bank--a banktheheadoffice
andbranches ofwhich lieintheKingdom--may begranted alicense if,among other things, itisa
Saudi jointstock company. Thisincludes jointventure banks. Aforeign bank--a bankwhose head
office liesoutside theKingdom anditsbranches therein--may begranted alicense toestablish oneor
more branches intheKingdom ifitsatisfies theconditions determined bytheCouncil ofMinisters
upon therecommendation oftheMinister ofFinance andNational Economy.
(f)Limitations OnTheParticipation OfForeign Capital
59. Foreign capital, whether inajointventure orwholly owned, mustbeapproved bytheForeign
Capital Investment Committee. Theconditions forapproval under theInvestment ofForeign Capital
Regulation arethatthecapital beinvested indevelopment enterprises, otherthanextraction ofpetroleum
andmining, andthattheforeign capital beaccompanied bytechnical expertise.WT/ACC/SAU/5
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60. Only Saudis areallowed toparticipate inthefollowing activities: security underwriting,
commodity brokerage services, currency exchange operations, commercial agencies, customs clearance
agencies, realestate agents, landtransportation ’s,andcivilian security. Also, certain sectors arereserved
forthestatesuchaspostal services, basictelecommunications services, radioandtelevision transmission
services.
(g) Measures Providing forLessThan National Treatment
61. Asspelled outabove, thereareavariety ofmeasures which provide forlessthanthetreatment
accorded tonational services orservice suppliers. Briefly, theyinclude thefollowing:
Ingeneral, anon-Saudi national maynot,other thanbysuccession, acquire theright of
ownership torealproperty within theKingdom ofSaudi Arabia. However, foreign
establishments authorized tocarry ontheiractivities intheKingdom ofSaudi Arabia under
theInvestment ofForeign Capital Regulation mayowntherealproperty required tocarry on
their licensed activities commensurate withsuchactivities, including therealproperty to
accommodate theemployees oftheestablishment concerned.
With regard togovernment procurement, qualified Saudi nationals andwholly Saudi-owned
firms mustbegiven priority forcontracts, followed bymixed Saudi-foreign establishments,
andfinally, wholly-foreign owned firms. Also, contractors generally must uselocal Saudi
establishments fortransportation, insurance, banking andcatering services, andservices for
theleasing andpurchase oflandandbuildings.
Ingeneral, non-Saudi business entities aresubject toincome taxwhile Saudi entities aresubject
toZakat.
Non-Saudi service industries maynotbeentitled tocertain promotional programs suchasmarket
research andmarketing programs including theorganization ofexhibitions orfacilitation ofparticipation
ininternational fairsandexhibitions, andtheestablishment ofmarketing centers (inside oroutside the
country).
Certain sectors aresubject torestrictions onmode ofsupply (seeparagraphs 51and56above).
4.Exceptions toMost Favoured Nation Treatment
62. Under Article 8oftheUnified Economic Agreement oftheGulfCooperation Council, member
states aretoagree onruleswhich would insure national treatment forGulfCooperation Council nationals
in,among other things, freedom ofmovement, work andresidence, rightofownership andfreedom
ofexercising economic activity, including service activities. Saudi Arabia, together withtheother Gulf
Cooperation Council members, isintheprocess ofimplementing thisagreement.
63. Some ofthebilateral agreements signed bySaudi Arabia confer preferred orreciprocal supplier
status oncompanies from signatory countries withregard tocertain services. Theagreements with
Jordan andEgypt confer reciprocal supplier status withregard tocross-border truck andpublic
transportation vehicles; theagreements withTunisia andEgypt stipulate thatpreference shallbegiven
tonational shipping andtransport modes inbilateral trade; theagreements withSyria, Turkey and
Lebanon provide forreciprocal treatment withregard totransportation andtransport vehicles; the
agreement withMorocco includes reciprocal airline privileges.