The Saudi Local Content Certificate: Who Issues It, How It Is Computed, What It Requires

The local content certificate has moved from being a competitive advantage to being an entry requirement. A business that bids for a government tender and discovers on the final day that it does not hold a certificate — or that its percentage falls below the minimum stated in the tender documents — is excluded regardless of the quality or price of its offer.

This is not a quick administrative step. The percentage is computed from approved financial statements and verified by a certified public accountant accredited with the Local Content and Government Procurement Authority (LCGPA) through agreed-upon procedures, before being submitted through the Authority’s platform. Which means the quality of your accounting records determines your percentage — not your preference for it.

What the local content certificate is

It is a certificate stating a business’s local content percentage for a financial year — the proportion of its spending directed into the national economy relative to its total spending. It forms part of the framework preferring local content and national products in government tenders and procurement.

The two types of certificate

Type	What it represents	When it is used
Baseline certificate	The business’s actual current performance for a completed financial year	Evidencing the existing position in prequalification and tendering
Target certificate	A contractual commitment to a future percentage during performance of a specific contract	Where the contracting entity stipulates a target percentage within the contract

The two are commonly confused: a baseline certificate describes what you are; a target certificate undertakes what you will be — with a materially different contractual consequence when measured later.

Who issues the certificate?

The certificate is not self-issued by the business, nor issued by an unaccredited party. The route is:

1. The business prepares its spending data, classified across the measurement axes.
2. A certified public accountant licensed and accredited with the Authority performs agreed-upon verification procedures on that data and its supporting documents.
3. The result is submitted through the Authority’s platform for the certificate to be issued.

The first question a business should therefore ask any firm is: is the firm accredited with the Authority for this specific purpose? A general licence to practise the profession is not sufficient on its own.

The measurement axes

The form is divided into one descriptive axis and four spending axes on which the percentage is built:

Axis	What it measures	Usual supporting evidence
Entity data	Descriptive: commercial registration, activity, ownership percentages, headcount — does not enter the numerical formula	Commercial registration and constitutional documents
Workforce	Cost of Saudi employees relative to total workforce cost	Payrolls and General Organization for Social Insurance certificates
Procurement	Goods manufactured or produced within the Kingdom relative to total procurement	Purchase invoices, certificates of origin and customs declarations
Assets and depreciation	Depreciation of fixed assets operating within the Kingdom relative to total depreciation	Fixed asset register and depreciation schedule
Services and contracts	Contracts with service providers within the Kingdom relative to total services	Contracts and the supplier’s commercial registration

The formula

For each axis: axis percentage = (items classified as local within the axis ÷ total spending on the axis) × 100

For the overall percentage: local content percentage = (sum of local items across the spending axes ÷ total spending across those axes) × 100

The detailed classification rules, and any weightings or coefficients the Authority’s guide applies to particular items, are subject to periodic update. The reference for them is the latest issue of the local content measurement guide and the Authority’s official regulations at the time of each computation. We do not state here percentages or coefficients we have not verified as currently in force.

What is the minimum required?

There is no single general statutory minimum applying to all tenders. The required minimum is read from the terms and specifications document of each individual tender. In practice many contracting entities have been observed to require percentages in a range of roughly 20% to 30%, varying by sector and the nature of the contract.

The working rule: read the tender documents; do not assume a general percentage.

Readiness: what must be available before starting

• Approved financial statements for the most recent financial year.
• Payrolls and social insurance certificates evidencing employee nationality.
• Purchase invoices and documentation, and evidence of the origin of goods.
• Fixed asset register and depreciation schedule, identifying the location of each asset.
• Principal service contracts and the commercial registrations of the suppliers.

Any gap here is not ignored — it is recorded as a limitation in the report, which weakens the certificate or delays its issue.

What most weakens the percentage — and can be fixed

1. Incomplete supplier records. A supplier whose commercial registration and activity are unknown must necessarily be classified conservatively. Completing supplier files alone raises the percentage in many cases without changing a single purchasing decision.
2. Undocumented origin of goods. An item genuinely manufactured locally but without documentation is treated as imported.
3. Mixing re-invoicing with genuine spending. Pass-through costs can inflate the figure artificially. This is among the first things examined on verification, and its presence casts doubt on the whole file.
4. Related party transactions not supported by contracts and comparable pricing.
5. An asset register that does not identify asset location, making classification impossible.
6. Leaving the work until after the tender is announced. This is the largest error: the certificate is built on a completed financial year and its percentage cannot be improved retrospectively — only documented correctly.

When to start

Because the percentage is computed from approved financial statements for a completed year, the correct sequence is to begin the local content work alongside the year-end close, not after a tender is announced. A business that classifies its spending in parallel with preparing its financial statements obtains the percentage at the lowest cost and the highest accuracy.

A business that wants to genuinely raise its percentage should note that the decisions that move it — hiring, supplier selection, asset location, and the structuring of service contracts — are taken during the year, and their effect appears in the following year’s certificate.

Frequently asked questions

How we can help

Almousa & Altamimi, Certified Public Accountants and Auditors works in this field on two tracks: preparing the local content package — classifying spending items across the axes, building the computation working paper, and identifying missing documentation before it becomes a limitation — and performing the verification procedures and issuing the report for submission through the Authority’s platform.

We also review percentages previously computed for businesses, to confirm the soundness of the classification before they are relied on in a tender.

See our Local Content Certificate service, or contact us — preferably alongside your year-end close rather than when a tender is announced. For year-end sequencing, see filing financial statements on Qawaem.

Quick reference: Glossary · FAQ

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Sources: Government Tenders and Procurement Law and its Implementing Regulations; the local content and national product preference regulations issued by the Local Content and Government Procurement Authority. Detailed classification rules, certificate validity and forms are updated periodically by the Authority; the reference is the latest issue of the local content measurement guide and the Authority’s official regulations. This content is general guidance and is not a substitute for professional advice on a specific case. Last updated: 14 September 2026.

The legal basis of local content preference

The certificate is not a standalone administrative step; it is an instrument inside a defined legal framework:

• The Government Tenders and Procurement Law (Royal Decree M/128 dated 13/11/1440H) provides in Article 9 for preference for local content, SMEs and companies listed on the capital market, and refers the detail to what the competent authority issues.
• The Regulation on Preference for Local Content, SMEs and Listed Companies in Government Procurement (Council of Ministers Resolution 245 dated 29/3/1441H) is the detailed reference: it defines local content and the preference mechanisms (Articles 1 and 3–4), governs the minimum required percentage and how it is computed (Articles 8–13), the weight of local content in the financial evaluation and the cap on its effect on award (Articles 14–19), the mandatory list and price preference for the national product (Articles 20–27), and the penalties for failing to meet contracted percentages (Articles 28–34).
• The Local Content and Government Procurement Authority organisational regulation (Council of Ministers Resolution 551 dated 15/9/1442H) sets out the Authority’s functions in Article 4, including establishing local content measurement mechanisms and accrediting the parties that verify it.

That is why the percentage is built on certified financial statements and verified through agreed-upon procedures by an accredited CPA: the figure is not a marketing estimate but an input to a financial evaluation formula with a statutory effect on award, and a penalty where it is not met after contracting.

Sources

• Government Tenders and Procurement Law — Royal Decree M/128 dated 13/11/1440H: Article 9
• Regulation on Preference for Local Content, SMEs and Companies Listed on the Capital Market in Government Procurement — Council of Ministers Resolution 245 dated 29/3/1441H: Articles 1, 3–4, 8–13, 14–19, 20–27 and 28–34
• Local Content and Government Procurement Authority organisational regulation — Council of Ministers Resolution 551 dated 15/9/1442H: Article 4
• The Local Content Measurement Guide and the Authority’s regulations — refer to the latest version published on the Authority’s website

Related guides

• Local content weighting in financial evaluation: how your bid is scored (with a worked example)
• After the award: progressive plan, final reports and penalties
• The Mandatory List and the national product price preference in supply contracts