In a strategic move to bolster international investment and foster economic growth, Saudi Arabia has unveiled a groundbreaking 30-year tax exemption plan for foreign companies establishing their regional headquarters (RHQ) within the kingdom. The announcement was made jointly by the Ministry of Investment, the Ministry of Finance, and the Zakat, Tax, and Customs Authority.
The comprehensive tax incentive package offers a 0% corporate tax rate for three decades, applicable from the date companies obtain their RHQ license. This initiative forms a crucial part of the RHQ Program, designed to position Saudi Arabia as the premier commercial, industrial, and investment hub for the MENA region. By providing an array of benefits and premium support services, the program aims to attract multinational companies (MNCs) and enhance the Kingdom’s global competitiveness.
This move follows a controversial ultimatum issued in February 2021, stating that any foreign company without its regional headquarters in Saudi Arabia by January 1, 2024, would be restricted from conducting business with state entities. The recent announcement reaffirms this deadline, emphasizing the Kingdom’s commitment to its RHQ campaign.
While the program has licensed over 200 companies to operate their regional head offices in Saudi Arabia, skepticism remains among foreign investors regarding the Kingdom’s ability to attract foreign talent. The tax incentive, coupled with other benefits like relaxed Saudization requirements and work permits for RHQ executives’ spouses, aims to address these concerns and position Saudi Arabia as an attractive destination for multinational corporations.
The RHQ initiative is a key component of Vision 2030, an ambitious campaign launched in 2016 to create private-sector jobs and diversify the economy away from oil, aligning with Saudi Arabia’s demographic landscape, where over 60% of the population is under 30 years old. As the January 1, 2024 deadline approaches, the Kingdom remains committed to realizing its vision and becoming a hub for global businesses in the MENA region.