Saudi Arabia Opens First Integrated Logistics Bonded Zone

Riyadh – Saudi Arabia, 2018 unveiled a new Special Integrated Logistics Zone scheme for prominent global enterprises in electronics, technology, pharmaceuticals, luxury products, jewelry and aerospace components, and supply chain. The first zone, the Integrated Logistics Bonded Zone (ILBZ), opened on October 31, 2022, at Riyadh’s King Khalid International Airport. The Integrated Logistics Bonded Zone is a special economic zone ideal for new business setup in KSA. It is also a fully integrated logistics bonded zone. 

Eligibility to register in the ILBZ:

Entities that have a license of the “Prescribed Activities” in the ILBZ and meet the eligibility benefit from incentives. Incentives include tax and customs benefits. 

The following are among the activities you can setup in this zone: 

  • Sorting, packaging, re-filling, trading, distribution, handling, and usage of items, including simple manufacturing processes. 
  • Import, export, and re-export.
  •  Logistics and value-added services and logistics.
  • Recycling of trash and electronic wastes.

ILBZ entities can be 100% foreign-owned, with no restrictions on capital repatriation. 

Customs duty and import restrictions will not apply to goods imported into the ILBZ.

Entities that choose to set up in the ILBZ will benefit from the following: 

  • A 50-year exemption from income tax and the requirement to withhold tax.
  • There are no limits on borrowing from abroad, repatriating cash, or transferring dividends, profits, commissions, and other comparable payments.
  • Special rules allow for the issuance of employment and resident permits within the ILBZ.
  • No limits on ownership of tangible and intangible assets.

What are the primary aspects of the new IBLZ customs regime?

To take advantage of the suspension of customs taxes and VAT within the ILBZ, commodities must be deposited in an ILBZ warehouse under the supervision of the Saudi Arabian General Authority for Civil Aviation (GACA). As a result, no customs duty or VAT would be levied on such products until they left the ILBZ and entered mainland territory.

The suspension of customs duties and VAT also applies to the shipment of goods.

Into or within ILBZ; between ILBZ and other GCC nations; between ILBZ and countries outside the GCC; and between ILBZ and other bonded zones inside KSA.

Imported commodities can enter ILBZ without having to go through any special procedures addressing limits and permits/licenses from the applicable regulatory authorities, regardless of whether they arrived by land, sea, or air.

In the event that the items are imported into the mainland, the importer must comply with all applicable customs compliance requirements, including any restrictions, and obtain all necessary licenses or licenses from the competent KSA authorities.

Law around warehouse closure or termination of activities in the zone 

On the occasion that a warehouse closes, the owner of the goods has ninety days to transfer the products to another zone or submit them. To further customs processes with GACA’s approval.

If a Zone Entity or the GACA wants to terminate the license. They must notify the other party in writing three months in advance. 

To understand the new laws about a Company formation in KSA effectively, we recommend consulting a professional business setup consultant. Experts in the industry can guide you on how to establish your company in KSA.