Saudi Arabia Lure MNCs with Tax Sops for Opening Their RHQs in the Kingdom

The Ministry of Investment of Saudi Arabia (MISA), in coordination with the Ministry of Finance and the Zakat, Tax and Customs Authority (ZATCA), on Tuesday announced 30-year tax incentive package for the Regional Headquarters (RHQ) Program, to lure multinational companies (MNCs) to establish their RHQ in Saudi Arabia.

The RHQ 30-year tax relief incentive includes a zero percent rate for Corporate income tax and withholding tax (WHT) related to the approved RHQ activities. These companies will benefit from the RHQ tax relief from the day they obtained their RHQ license, the Ministry said.

The RHQ Program is a joint initiative of MISA and the Royal Commission for Riyadh City (RCRC) and aims to attract MNCs to set up their RHQ in Saudi Arabia and position the Kingdom as the leading commercial, industrial and investment hub for the MENA region, by offering a range of benefits and premium support services that complement the Kingdom’s globally competitive value proposition. First launched in 2021, the program has now licensed over 200 companies to operate their RHQ from Saudi Arabia.

Additionally, seven international K-12 schools have announced their new campuses in the Kingdom under a dedicated supporting program targeting best-in-class international schools from around the world.

Incentives Beneficial to MNCs

Minister of Investment Khalid Al-Falih said that the tax incentive gives multinational companies operating in the region yet another reason to make Saudi Arabia home to their regional headquarters, on top of other benefits such as relaxed Saudisation requirements and work permits for the spouses of RHQ executives.

“The Kingdom’s long-term economic stability, young and skilled workforce, strategic location and strong growth prospects have already attracted the world’s leading companies to pick Saudi Arabia as their new regional base of operations, while an even greater number of executives, entrepreneurs and talented professionals from elsewhere in the region and the world are finding the Kingdom a most attractive place to advance their careers,” Al-Falih added.

Minister of Finance Mohammed Al-Jadaan said that this new incentive gives business more visibility and certainty for future planning as MNCs expand their presence in the region through Saudi Arabia while also taking part in our own transformation journey.

“We look forward to welcoming more MNCs to participate in projects across all sectors, including our giga-projects and in preparation for the hosting of such events as the 2029 Asian Winter Games and Expo 2030,” Al-Jadaan added.

Saudi’s Project HQ

With several large-scale “Vision 2030” projects taking place, Saudi Arabia has launched Project HQ in 2021 and made it clear that no contracts will be given to the companies and commercial institutions if they are not based in Saudi Arabia after 2024.

The US companies such as Greenbrier, Bechtel and CSG have already announced that their regional headquarters will be in Riyadh. In fact, the US companies accounted for 33 new investment projects in Saudi Arabia in 2020 and indicating that foreign companies were keen to invest in Saudi Arabia.

Though Saudi Arabia is the largest economy in the region, only few companies have their base in the country while most of their revenues are generated locally. Project HQ also aims to increase FDI from 3.8% to 5.7% of GDP by 2030 and increasing private sector contributions to the economy from 40% to 65% over the same period.