Saudi Arabia presents 30-year tax aid plan to lure regional company HQs

Cityscape of Saudi capital Riyadh.

Harri Jarvelainen Photography | Moment | Getty Images

DUBAI, United Arab Emirates — Saudi Arabia announced a 30-year tax exemption package for foreign companies establishing their regional headquarters in the kingdom, the latest move in its aggressive campaign to attract international investment and headcount.

“The Ministry of Investment of Saudi Arabia, in coordination with the Ministry of Finance and the Zakat, Tax and Customs Authority today announced 30-year tax incentive package for The Regional Headquarters (RHQ) Program, to further streamline the process for multinational companies (MNCs) to establish their RHQ in Saudi Arabia,” the Saudi state press agency wrote in a statement Tuesday.

The offer includes a 0% corporate tax rate for 30 years, which will be applied for companies “from the day they obtained their RHQ license,” the statement read.

The program “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,” the statement added.

A controversial ultimatum

The kingdom grabbed investor attention and sparked controversy in February 2021 when it first announced its RHQ campaign, declaring that any foreign company that did not have its regional headquarters office in Saudi Arabia by the start of 2024 would be barred from doing business with state entities.

The news stunned investors and expat workers, many of whom saw the move as a shot at Dubai, the United Arab Emirates commercial capital that is home to the highest concentration of Middle East regional headquarters.

In October of this year, Saudi ministers made clear that the ultimatum still held firm: Foreign companies will need to base their regional headquarters in the kingdom by Jan. 1, 2024 or be barred from lucrative government contracts.

Many foreign investors are still skeptical of the ability of Saudi Arabia — an infamously conservative Muslim theocracy known for its highly criticized human rights record — to sufficiently attract foreign talent.

Expats in the regional HQ hub of Dubai question the kingdom’s ability to provide sufficient quality-of-life services like international schools, ample housing, and aspects of a more Western lifestyle, such as alcohol, which is currently illegal in Saudi Arabia.

Saudi Arabia says the RHQ program has so far licensed more than 200 companies to operate their regional head offices in the kingdom. And in an apparent response to the concerns of many expat workers that families there would struggle to find international schools for their children, “seven international K-12 schools have announced their new campuses in the Kingdom,” the Saudi Press Agency statement wrote.

“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 Saudization requirements and work permits for the spouses of RHQ executives,” Saudi Minister of Investment Khalid Al-Falih was cited by the SPA as saying.

The kingdom’s regional HQ drive is a part of Vision 2030, an ambitious campaign launched by Crown Prince Mohammed bin Salman in 2016, which aims to create private sector jobs and diversify its economy away from oil as Saudi Arabia’s population — more than 60% of whom are under the age of 30 — grows.

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