December 15, 2023
Saudi Arabia offers 30-year tax holiday under Regional Headquarters program
On 5 December 2023, the Ministry of Investment of Saudi Arabia (MISA), in conjunction with the Ministry of Finance, and the Zakat, Tax and Customs Authority (ZATCA), announced a 30-year tax incentive package for multinational companies with regional headquarters (RHQ) activities in Saudi Arabia, according to the Saudi Press Agency. The comprehensive tax incentive package offers a 0% corporate tax and withholding tax rate for three decades on approved regional headquarter activities, applicable from the date companies obtain their RHQ license.
The new tax exemption is expected to further boost the appeal of Saudi Arabia to multinational companies and help the country achieve its goal of becoming one of the world's 10 largest city economies by 2030.
Formal regulations on the proposed tax incentive scheme are still awaited.
In February 2021, Saudi Arabia launched the RHQ program informing foreign companies looking to conduct business with Saudi government entities to have their RHQ based in Saudi Arabia by 1 January 2024. Since then, more than 200 companies have been licensed to operate their RHQ from Saudi Arabia.
The recent tax incentive package is provided to further facilitate and encourage the establishment of such foreign companies' RHQs in Saudi Arabia.
Highlights of the RHQ program and the tax incentive package
Under the new 30-year tax incentive package, businesses are encouraged to relocate their RHQ to Saudi Arabia to benefit from the applicable incentives and advantages and explore business opportunities with state entities.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Professional Services (Professional LLC), Riyadh
Ernst & Young Professional Services (Professional LLC), Jeddah
Ernst & Young Professional Services (Professional LLC), Al Khobar
EY Consulting LLC, Dubai
Ernst & Young — Middle East, Bahrain
Ernst & Young LLP (United States), Middle East Tax Desk, New York
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor