Phase 2: Coffee Shop License in Saudi Arabia — Legal Requirements & Approvals

If you ask a failed café owner in Riyadh why they closed, they often blame “market saturation.” But if you dig deeper, you usually find something more damaging: they never secured their coffee shop license properly — and the result was relentless compliance fines.

Opening a shop without a valid Civil Defense permit? Fine.
Playing music without a Music Commission license? Fine.
Your cashier didn’t print a QR code receipt? Massive fine.

The good news is that the days of carrying a green paper folder between ten ministries are over. Saudi Arabia’s digital transformation — through the Saudi Business Center, Balady, and Qiwa portals — has made licensing faster and clearer than ever. However, the sequence is critical.

This guide outlines the exact chronological order to legalize your coffee shop.

🛑 Step 0: The Golden Rule of Sequence

You cannot do everything at once. You must follow this chain:

CR ➔ Bank Acct ➔ Lease (Ejar) ➔ Balady License ➔ Civil Defense ➔ ZATCA

If you try to lease a shop before you have a CR, the landlord cannot register the contract in Ejar, and you will be stuck.

📜 Step 1: The Commercial Registration (CR)

Arabic: Sijil Tijari

• Where to apply: Saudi Business Center or Ministry of Commerce (MC) website.
• Cost: Approx. SAR 1,200 per year + Chamber of Commerce fees (approx. SAR 900).
• Activity Code (ISIC): This is critical. For a coffee shop, ensure you select the correct ISIC code.
  
  • Common Code: 5630 (Beverage serving activities).
  • Note: If you plan to roast beans and sell them wholesale, you may need a different/additional code for “Roasting.”

Action Item: Issue your CR for 3 to 5 years immediately. Renewing it every year is a hassle you don’t need.

🏢 Step 2: The Location & “Ejar” Contract

The bridge between your company and your shop.

Once you find your shop (see Phase 3), you must sign a digital contract via the Ejar network.

• Why it matters: The Municipality (Balady) pulls your lease data directly from Ejar. If your landlord gives you a paper contract, it is worthless for licensing.
• Usage Type: Ensure the landlord lists the usage as “Commercial” (Tijari), not office or warehouse.

🏗️ Step 3: The Municipal License (Rakhsat Balady)

The “Big Boss” license.

This is the permit that allows you to operate a specific physical location. You apply via the Balady Portal.

This is the permit that allows you to operate a specific physical location. You apply via the Balady Portal. If you are unsure how to navigate the portal, read our step-by-step guide on how to issue a coffee shop license on Balady.

The Two Paths:

1. Instant License (Fawri): You get the license immediately online.
   
   • Pros: fast; you can start fit-out works instantly.
   • Cons: You are promising you comply with all rules. If Balady inspects you later and your sign is 10cm too big, you get fined.
2. Standard Track: An inspector visits first, then approves.

Key Balady Requirements for Cafes :

• Signboard: Must be bilingual. Arabic text must be 50% of the area and located on the right or top.
• Glass Frontage: Must be transparent (no tinting that obscures the view inside).
• Preparation Area: Floors and walls must be washable (ceramic/epoxy).
• Electronic Payment: You must have a functioning Mada terminal (verified later).

           The Most Common Balady Fines for Coffee Shop

🚒 Step 4: Civil Defense (Salamah)

Safety is non-negotiable.

For small cafes (under 150-200 sqm), the Civil Defense license is often issued instantly via the Salamah portal if you upload a certificate from an approved safety contractor.

You will need:

1. Safety Equipment Contract: You must pay a certified safety company to install and maintain your fire extinguishers and smoke detectors.
2. Equipment:
   
   • Fire Extinguishers: Usually CO2 (for machines) and Wet Chemical (if you have a kitchen).
   • Smoke/Heat Detectors: Wired into a central panel.
   • Emergency Exit Sign: Must be illuminated.

Warning: Do not buy fire extinguishers from a random hardware store. They must be tagged and certified by a licensed safety contractor, or the system will reject them.

🧾 Step 5: ZATCA & E-Invoicing (Fatoorah)

The Taxman Cometh.

As of 2025, virtually all businesses are moving into Phase 2 (Integration Phase) of e-invoicing.

1. VAT Registration: Mandatory if your annual revenue exceeds SAR 375,000. (Most cafes will hit this).
2. The POS System: You cannot use a manual cash register. You must use a ZATCA-compliant cloud POS (e.g., Foodics, Odoo, Revel).
3. The Receipt: Your thermal receipt must contain a QR Code. When scanned, this code shows the date, time, VAT amount, and total.

Phase 2 Requirement: Your POS must “talk” to ZATCA’s servers. When you close a sale, the data is reported. Ensure your software provider handles this “Integration” for you.

🎫 Step 6: The “Extra” Permits

Depending on your concept, you may need these:

✅ Phase 2 Checklist: Am I Legal?

Before you serve your first customer, ensure you have these documents in a folder (and digital copies on your phone):

• [ ] Commercial Registration (CR) – Active
• [ ] Municipal License (Rakhsa) – Printed and hung in a visible place (mandatory).
• [ ] Civil Defense Permit – Active.
• [ ] Food Handlers Cards – Every barista must have a health certificate (Balady Health Card).
• [ ] VAT Certificate – Framed and visible.
• [ ] ZATCA-Compliant POS – Tested and printing QR codes.
• [ ] National Address – Registered.

What’s Next?

Now that you are legal on paper, you need a physical space to put that license on. It’s time to navigate the Saudi real estate market, understand “Key Money,” and sign that Ejar contract.

👉 Next Step: Go to Phase 3 – Location Selection & Leasing