Saudi Arabia announces 30-year tax relief to attract top HQs

2 mins read

Saudi Arabia has introduced a 30-year tax exemption package for foreign companies establishing their regional headquarters in the country. The tax incentive, part of Saudi Arabia’s Regional Headquarters (RHQ) Program, includes a 0% corporate tax rate for three decades for companies obtaining an RHQ license. This initiative aims to attract multinational companies (MNCs) to set up their regional headquarters in Saudi Arabia, positioning the kingdom as the leading commercial, industrial, and investment hub for the Middle East and North Africa (MENA) region.

The RHQ Program, launched in February 2021, initially raised eyebrows with its ultimatum stating that any foreign company not having its regional headquarters in Saudi Arabia by January 1, 2024, would be prohibited from conducting business with state entities. The move was seen as a direct challenge to Dubai, which hosts a significant number of regional headquarters.

The recent tax incentive is part of the broader strategy outlined in Saudi Arabia’s Vision 2030, initiated by Crown Prince Mohammed bin Salman in 2016. The vision aims to create private sector jobs and diversify the economy away from oil as the country’s young population grows.

The tax exemption package is designed to enhance Saudi Arabia’s competitiveness in attracting foreign talent and investment. The incentives include relaxed Saudisation requirements and work permits for the spouses of RHQ executives. The program has already licensed over 200 companies to operate their regional head offices in the kingdom.

Despite these efforts, some foreign investors remain skeptical about Saudi Arabia’s ability to attract foreign talent, given its conservative reputation and human rights concerns. However, the tax incentives, along with other benefits, aim to address these concerns and encourage multinational companies to establish their regional headquarters in the kingdom.