On 5 December 2023, the Ministry of Investment of Saudi Arabia (“MISA”), in collaboration with the Ministry of Finance and the Zakat, Tax and Customs Authority (“ZATCA”), officially announced a 30-year tax relief program as an incentive to attract foreign global companies to establish their regional headquarters (“RHQ”) in the Kingdom of Saudi Arabia (“KSA”). Introduced in 2021, the RHQ program has already granted licenses to over 200 companies to operate their RHQ from KSA and its objective is to attract even more enterprises.
The comprehensive 30-year incentive package will grant foreign companies the opportunity to enjoy a tax rate of zero percent for both the (i) corporate income tax and (ii) withholding tax on the approved regional headquarters activities. Notably, the current corporate income tax rate in KSA stands at 20% and the withholding tax varies between 5% to 20%.
Companies establishing their headquarter in KSA will immediately benefit from this newly introduced package from the day their headquarters license is issued. This initiative will empower multinational corporations, enabling them to expand their regional presence through KSA and fostering the creation of new job opportunities.
Aligned with KSA’s Vision 2030, this tax incentive program aims to boost foreign direct investments and contribute to the economic diversification of the country, ultimately allowing KSA to reduce its dependence on oil generated revenues. This initiative positions KSA as a compelling alternative to other business hubs like the United Arab Emirates, aiming to establish itself as the premier commercial and investment hub in the Middle East by offering promising advantages to companies seeking a strategic business environment in the region.
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