Contractor Classification Certificate in Saudi Arabia: Grades, Requirements and Your Financial File

A contractor classification certificate records the result of the Ministry of Municipalities and Housing’s assessment of a contractor’s financial, technical, administrative and execution capabilities, which places the contractor in the field, activity and grade it qualifies for. Classification is governed by the Contractor Classification Law issued by Royal Decree No. M/9 dated 18/1/1443 AH, and the certificate is issued electronically on the Balady platform, valid for two Gregorian years.

The law speaks to government entities before it speaks to contractors: they may not accept an offer from a contractor that is not classified in the project’s field, activity and grade. That makes the certificate a practical requirement for any contracting business bidding on a government project that is subject to classification.

Behind the forms and the platforms, classification rests on a financial file. The new Implementing Regulation names eight line items from your financial statements that feed the assessment, and it requires statements approved and certified by a licensed chartered accountant and filed on the Qawaem program. This guide covers the certificate and who needs it, walks through the financial file item by item, and then moves on to government tenders on the Etimad platform.

What Is Contractor Classification? The Legal Definition and the Responsible Authority

Article 1 of the law defines classification as “assessing the contractor’s capabilities: financial, technical, administrative and execution, to place it in the field, activity and grade it deserves.” The current law replaced the previous Contractor Classification Law issued by Royal Decree No. M/18 dated 20/3/1427 AH.

The Ministry handles classification and issues, amends, suspends and cancels certificates (Article 2). The current Implementing Regulation calls it the Ministry of Municipalities and Housing, while the text of the law carries its former name, the Ministry of Municipal and Rural Affairs and Housing (MOMRAH). The application service card on the Ministry’s website states that the request goes to the General Administration of Classification for approval.

The Implementing Regulation in force today was issued by Ministerial Decision No. 4700007402/1 dated 19/2/1447 AH and replaced the previous regulation. This matters because a lot of published content still repeats rules from the repealed regulation, including the certificate’s validity period.

Field, Activity and Grade: Three Words That Decide What You May Execute

• Field: the type of work the business carries out.
• Activity: a sub-type of work within the field.
• Grade: the result the contractor receives after assessment in that field.

The Ministry sets and amends fields, activities and grades by decision of the Minister, based on the National Classification of Economic Activities (Article 4 of the law). Article 4 of the regulation places them within execution and installation work, maintenance and repair, operation and services, or activities of a direct technical or operational nature. Work limited to supplies or administrative consulting is excluded.

Who Needs a Contractor Classification Certificate?

Article 3 of the law is the reference here: “Government entities, bodies, institutions and agencies with public legal personality may not award or accept any offer or bid for any project subject to classification unless the contractor is classified and the project falls within the field, activity and grade in which the contractor is classified.”

In practice, the contractor classification certificate is tied to government projects that are subject to classification. On those projects, being classified is not enough on its own: the project has to fall within your field, activity and grade.

Private Projects

Neither the Contractor Classification Law nor its Implementing Regulation requires a contractor to be classified to carry out a private project; neither text says so. A private project owner may still require classification in the contract or in the request for proposals, and at that point the requirement is contractual between the two of you. Read the terms of every offer before you bid.

Cases That Need Extra Care

• Foreign contractors: a contractor licensed under the Foreign Investment Law is classified through the same procedures, and the Council of Ministers may exempt it (Article 11).
• Joint ventures between contractors: every partner must be classified in the project’s field, at least one of them in the required field and grade, and the others at the same grade or no more than one grade below (Article 9).
• Subcontractors on a government contract: the Implementing Regulation of the Government Tenders and Procurement Law in force today (M/128) requires the subcontractor to be classified in the field and at the required grade if the work is of a kind that requires classification, with the entity’s prior approval, and subcontracted work may not exceed 30% of the contract value.

Contractor Classification Grades and Financial Limits: Who Sets Them?

Every grade carries a financial limit, and a government project must fall within the contractor’s grade as Article 3 requires. Article 5 of the law leaves setting and amending these limits to a decision of the Minister, in agreement with the Minister of Finance and the Minister of Economy and Planning.

That is why neither the law nor the regulation contains a table of figures. Financial limits are issued and changed by ministerial decisions, and the Balady platform refers to a guide to the financial limits for classification sector activities. Check that guide on the platform before any decision that depends on a figure.

Be careful with figures circulating in older articles. Many of them date back to a previous structure and carry the Ministry’s old name, so do not build a bid or an expansion plan on them.

What if you carried out work worth more than your grade’s limit, as a subcontractor for example? Article 8 of the regulation states that such a project counts as experience only up to the equivalent of your grade, not at its full value.

Contractor Classification Requirements and Criteria

Article 6 of the law sets the classification criteria along three axes, plus any criteria the regulation adds:

1. Financial capability: measured from the financial statements.
2. Technical, administrative and execution capability: organisational structures and administrative and technical staff.
3. Projects: their total number, type and value.

What the Service Card Asks for Today

The “Submit a Classification Certificate Application” service card on the Ministry’s website sets two prerequisites: the business must hold a credit rating and a technical standards certificate. The card also states that the service itself does not require uploading documents.

The card describes the electronic service, while the Implementing Regulation, which is the legal text, determines what the assessment is based on. So prepare the documents the regulation names below even if the card does not ask you to upload them, since the Ministry may request any document the analysis needs.

Documents Named in the Regulation

Article 5 of the Implementing Regulation lists what a classification application is based on:

• Classification forms.
• A valid commercial registration covering the requested fields and activities, plus the commercial licence.
• The statement of financial position and the income statement for the most recent year.
• Organisational structures and governance mechanisms, and staff numbers and experience.
• Contracts for completed or ongoing projects, with completion of at least 50% for execution work and 30% for maintenance, operation and services.
• The owner’s approval of any assignment or subcontracting on government projects, and the main contractor’s disclosure of subcontractor contracts and their value.
• A collective housing licence for businesses with more than 20 workers, in fields the Minister specifies.
• A parent company undertaking if the business is a branch of a foreign company.

The Ministry may request any other documents the analysis needs. Documents are submitted in Arabic, or translated by an accredited translation office.

On the technical side, Article 7 of the regulation requires technical and administrative staff to be inside the Kingdom, with experience matching the requirements of the technical standards certificate.

The Contractor’s Financial File: What Is Actually Assessed?

This is where your grade starts. The regulation does not stop at asking for “financial statements”: it specifies where they come from, who certifies them and which of their line items enter the calculation.

Financial Statements: Approved, Certified and Filed on Qawaem

Article 5 of the regulation requires the financial statements to be “approved and certified by a chartered accountant licensed to practise the profession.” It also requires statements issued in the Kingdom to be filed with the Saudi Business Center through the Qawaem program.

Note the wording: the regulation says “approved and certified,” and the party that approves them is a licensed chartered accountant. Your accounting system produces the statements from your books; the chartered accountant is the one who approves and certifies them.

The Eight Line Items in the Financial Assessment

Article 7 of the regulation names eight line items for the financial assessment, all read from the income statement and the statement of financial position, as shown above.

Three further factors enter alongside these line items: income-source diversification, governance and competitiveness.

Notice what is not on the list. The regulation does not ask for an equipment schedule; equipment enters only through the net property and equipment line. Capital is not an assessment criterion either; it appears only when a certificate has to be amended after commercial registration details change.

The practical consequence: if you record your equipment as expenses instead of fixed assets, net property and equipment and total assets will show less than you actually own.

When Does a Project Count Toward Your Experience?

Article 7 of the regulation sets value thresholds for the projects that enter the assessment:

A project counts for a maximum of 10 years from the date its contract was signed. The regulation also requires that, during the last 3 years, the contractor has had no government projects withdrawn for reasons attributable to it by two or more entities, and no municipal violations in the field.

For private projects in particular, the accepted value is whatever the certified statement of revenues and expenses proves. If each project’s revenues and expenses are not separated in your books, producing that statement project by project becomes hard.

Projects That Do Not Count as Experience

Article 8 of the regulation excludes a project in these cases:

• Its contract was signed before the commercial registration date.
• It falls outside the classification fields.
• It was withdrawn from the contractor.
• The contractor had no actual role in carrying it out.
• It was subcontracted without the owner’s approval.

A project carried out as a subcontractor whose value exceeds your grade’s financial limit counts at the equivalent of your grade, as covered above.

Commercial Books: Regular and in Arabic

Article 10 of the regulation requires the contractor to keep the commercial books and documents that prove the accuracy of the balance sheet and the income statement certified and filed on Qawaem. The books must be regular and in Arabic, in line with the Commercial Books Law.

This requirement ties your certificate to what happens in your books all year round, not to what you put together a few weeks before applying. Certified statements are the output; the books are the source they are drawn from.

How to Apply for the Classification Certificate on Balady

Applying, renewing, inquiring and verifying are all electronic-only services, on the Balady platform and its app, under the “Cities Service Providers Classification” product.

1. Sign in: with the business’s unified national number, or the licence number for engineering offices. The platform retrieves the business’s data from the Ministry of Commerce.
2. Check the two prerequisites: the credit rating and the technical standards certificate.
3. Technical grade: the first step in the application.
4. Project data and performance record: an optional step.
5. Credit rating: by choosing one of the paths available in the application.
6. Decision: within 60 working days at most once the requirements are complete; the service card mentions a period of 5 to 60 days.

If the Ministry asks for missing requirements and you do not complete them within 90 days of notice, the application is cancelled (Article 13 of the regulation). Prepare your financial file before you start, not after the completion request arrives.

Certificate Validity, Renewal and Extension

The Ministry grants the classification certificate for two Gregorian years (Article 6 of the current regulation). The 1443 AH regulation provided for one Gregorian year, so any source that says “one year” is quoting a repealed rule.

Renewing a Contractor Classification Certificate

A request to renew a contractor classification certificate, which the regulation calls re-classification, is filed within the 90 days before the certificate expires (Article 11). The renewal service card on Balady checks that fewer than 90 days remain before expiry, then runs through the same steps: technical grade, then projects, then credit rating.

That means your latest financial statements need to be ready and filed before the renewal window opens.

Extension, Amendment and Grade Upgrade

• Extension: validity can be extended 90 days from its end date, once only, at the contractor’s request (Article 12). An extension request is decided within 10 working days.
• Amendment: any legal change to the commercial registration requires a request to amend the certificate within 30 days (Article 15). This covers the trade name, ownership, legal form, nationality, registration number and date, and capital.
• Upgrading or removing a grade: possible 90 days after the certificate is issued. Adding a field or activity is possible while the certificate is valid (Article 14).

Objections and Penalties

A classification decision can be challenged before a committee within 60 days of notice, followed by a grievance before the Administrative Court within 60 days of notice of the committee’s decision (Article 19 of the regulation). Penalties under the law include downgrading, suspension and a ban on renewal for up to 5 years, or cancellation (Article 15 of the law).

Contractor Classification Inquiry and Certificate Verification

The certificate is issued electronically, and Article 3 of the regulation requires project-owning entities to verify it through the Ministry’s website. Anyone can use the same contractor classification inquiry service.

The classification certificate verification service is available to individuals free of charge, and you can search by any of the following:

• Certificate number.
• The business’s unified national number.
• Contractor name.
• Advanced search by classification type, field and city.

If you own a private project and are comparing contractor offers, this service tells you whether a contractor is actually classified and in which field. To look up businesses registered as members of the Saudi Contractors Authority, there is the Muqawil platform, which is a directory of registered businesses, not a licence and not a classification.

Classification Certificate Fees

Article 12 of the law and Article 16 of the regulation state that the Ministry charges a fee it sets in agreement with the Ministry of Finance. Neither the law nor the regulation gives a specific amount.

What the service cards on the Ministry’s website say today:

• Submit a classification certificate application: the card refers to a “fee calculator” and gives no amount.
• Renew a classification certificate: the service is free.
• Verify a classification certificate: the service is free.

“Free” here describes the renewal service as its card states it. It does not mean the two prerequisites, the credit rating and the technical standards certificate, come at no cost. Ask what they cost before you start.

Before you build the application budget on a figure, check the fee calculator the service card refers to on the date you apply.

From Classification Certificate to Government Tenders on Etimad

The certificate alone does not win you a project. It is one document in your bid file when you compete in a government tender on the Etimad platform. If you are tracking payments due from government entities after an award, our guide to checking a payment order shows how to follow them up.

What Tender Documents Ask For

The Implementing Regulation of the Government Tenders and Procurement Law in force today (M/128) lists among the bidder’s documents:

• A classification certificate in the field of the work being bid for, if that work is of a kind that requires classification.
• A certificate of membership in the Saudi Contractors Authority, for construction and contracting work.

The tender documents themselves include the “classification field, if any.” Read this field first: if it does not match your field and grade, Article 3 of the Classification Law prevents the entity from accepting your bid.

The tenders committee may penalise a violator with a ban on dealing with government entities for up to 5 years, a downgrade of its classification where one exists, or both.

A new tenders law (M/76) has been issued and published in the official gazette, Umm Al-Qura. It takes effect after a period the law specifies, and tenders launched before then remain subject to the previous law. So check the terms booklet of every tender before you rely on any percentage or deadline.

After the Award: Progress Claims and Invoicing

Once execution starts, your financial file turns from an application document into daily work. Contracting services in the Kingdom are subject to VAT at 15% if the contractor is registered for it, and registration is mandatory once taxable supplies exceed SAR 375,000 over 12 months.

A resident contractor registered for VAT issues an e-invoice for every contracting progress claim it bills. If you are preparing your first claim, start from a ready-made contracting payment application template, then see how to record the retention the owner holds back from each payment.

How to record these transactions in your books is covered in our guide to contracting accounting, with journal entries and examples, alongside the Qoyod glossary entries for construction accounting, construction contract accounting and construction contract revenue.

A government project you carry out enters your project record at re-classification if its contract value reaches SAR 500,000 or more and it reaches the completion rate the regulation requires. So keep its progress claims and invoices linked to the same project in your books.

Financing the Contract

A government project may need working capital before the first progress claim is paid. Small and medium businesses looking for guaranteed financing can look into the Kafalah program.

Common Mistakes in a Classification File

• Assuming one-year validity: validity today is two Gregorian years, and anyone counting one year renews at the wrong time.
• Missing the renewal window: renewal is filed within the last 90 days, and a 90-day extension of validity is allowed once only.
• Statements not filed on Qawaem: the regulation requires statements issued in the Kingdom to be filed, not just prepared.
• Private projects without a certified statement: a private project counts at the value in its certified statement of revenues and expenses, so prepare one per project before you apply.
• Contracts signed before the commercial registration: they do not count as experience, whatever their value.
• A registration change without amending the certificate: the amendment is due within 30 days of the change.
• Subcontracting without the owner’s approval: the project does not count as your experience.
• Confusing the Muqawil platform with the classification certificate: membership in the Saudi Contractors Authority is a separate document, not a classification.

How Qoyod Helps You Prepare Your Financial File for Classification

Qoyod does not prepare or submit the classification file, and it does not certify financial statements. What it does is the part that comes before all of that: organised books that produce what the chartered accountant and the Balady platform need.

• Projects feature to separate every contract: set up each contracting contract as its own project and record its contract number, start and end dates and value. Then link invoices, expenses and manual journal entries to it. The feature is available from the Pro plan upward, together with cost centers for allocating costs across projects.
• Income statement per project: from the advanced analysis option, filter the income statement to a single project, or compare several projects or up to 13 periods in side-by-side columns, then export the result to Excel. When each project’s revenues and expenses are separated this way, the chartered accountant finds the figures ready when preparing the statement for a private project.
• Balance sheet (statement of financial position) and trial balance reports: the first shows the assets, liabilities and equity that six of the eight assessment line items come from, and the second summarises every account balance. Both can be filtered by project.
• Fixed assets module: record equipment, vehicles and machinery as fixed assets, with depreciation calculated on the straight-line method and the depreciation entry created automatically when it runs. Their net value after depreciation then appears on the balance sheet, which is where the net property and equipment line comes from.
• An e-invoice for every progress claim: Qoyod is ZATCA certified and compliant with Phase 2 of e-invoicing, so each claim’s invoice is issued from the same system where the project’s revenue is recorded.
• If you have no in-house accountant: the remote bookkeeping service from Qoyod Pro Services records your accounts as you go and delivers monthly financial reports and annual financial statements in Arabic and English. Approving and certifying the statements for classification purposes remains the job of a licensed chartered accountant.

You will find the available reports on the real-time financial reports page of the Qoyod accounting software. For everything Qoyod offers your sector, see the accounting software for real estate and contracting page and the accounting software for construction companies page.

If bookkeeping, or how it differs from an external audit, is unclear, the two Qoyod glossary entries show where your accountant’s work ends and the chartered accountant’s begins.

Frequently Asked Questions

What is contractor classification in Saudi Arabia?

Contractor classification is an assessment by the Ministry of Municipalities and Housing of a contractor’s financial, technical, administrative and execution capabilities, placing it in the field, activity and grade it qualifies for. It is governed by the Contractor Classification Law issued by Royal Decree No. M/9 dated 18/1/1443 AH and its Implementing Regulation, and the certificate is issued electronically on the Balady platform.

Is contractor classification mandatory for private projects?

Neither the Contractor Classification Law nor its regulation contains a provision requiring a contractor to be classified for a private project. The obligation in Article 3 is addressed to government entities, which may not accept an offer from a contractor that is not classified in the project’s field and grade. A private project owner may still require classification in its contract.

What are the contractor classification grades?

A grade is the result a contractor receives after assessment in the field and activity it applied for. The Ministry sets and amends grades, fields and activities by decision of the Minister, based on the National Classification of Economic Activities. You will find the grades currently in force on the Balady platform.

What are the financial limits for contractor classification in 2026?

The financial limit for each grade is set by a decision of the Minister in agreement with the Minister of Finance and the Minister of Economy and Planning (Article 5 of the law), and the figure does not appear in the law or the regulation. Check the guide to the financial limits for classification sector activities on the Balady platform, and do not rely on figures from older articles.

What does a contractor classification certificate cost?

The Ministry charges a fee it sets in agreement with the Ministry of Finance, and neither the law nor the regulation sets the amount. The application card refers to a “fee calculator” without giving an amount, while the certificate renewal and verification services are free according to their cards on the Ministry’s website.

What are the requirements for contractor classification?

The service card requires the business to hold a credit rating and a technical standards certificate. The regulation names what the assessment is based on: a valid commercial registration; the statement of financial position and the income statement for the most recent year, approved and certified by a licensed chartered accountant and filed on Qawaem; organisational structures and staff; and contracts for completed or ongoing projects.

How long is a contractor classification certificate valid?

Two Gregorian years under Article 6 of the current Implementing Regulation. Renewal is filed within the 90 days before expiry, and validity can be extended by 90 days after its end date, once only, at the contractor’s request.

How do I check a contractor’s classification?

Through the classification certificate verification service on the Ministry of Municipalities and Housing website and the Balady platform. Search by certificate number, unified national number or contractor name, or use advanced search by classification type, field and city. The service is available to individuals free of charge.