Saudi Arabia offers tax breaks for companies moving regional HQs to Riyadh

Saudi Arabia offers tax benefits aimed at foreign companies setting up their regional headquarters within the kingdom. This initiative includes a remarkable 30-year exemption from corporate income tax. This move aligns with their earlier announcement in February 2021, wherein Saudi Arabia indicated plans to halt awarding government contracts to companies unless their regional headquarters are established in the country by January 1, 2024.

As part of Crown Prince Mohammed bin Salman's strategy to diversify Saudi Arabia's economy away from oil and create job opportunities for Saudis, an ultimatum was issued to require companies seeking government contracts to establish their regional headquarters in the country by January 1, 2024. This move has intensified the competition between Saudi Arabia and the United Arab Emirates, a key regional business hub.

Saudi Arabia introduced a comprehensive tax exemption plan for regional headquarters, featuring a 30-year period of zero percent income tax for these entities along with waived withholding tax on approved activities. The program starts benefiting international companies from the issuance date of their licenses. Reportedly, around 200 foreign companies have already been drawn to this initiative, as mentioned by Saudi Investment Minister Khaled Al-Falih. Saudi Finance Minister Mohammed Al-Jadaan highlighted that these new tax exemptions for regional headquarters activities will provide greater clarity and stability for international companies operating within the kingdom, offering them a clearer strategic vision.

"We look forward to welcoming more international companies to participate in projects in all sectors, including mega projects, and our preparations to host major events such as the Asian Winter Games in 2029, and the Expo 2030,” Jadaan added.

Foreign companies have scrambled to meet the Saudi condition to relocate their regional headquarters after the kingdom said in October the deadline will be enforced.

However some companies have raised concerns over the regulatory framework, including taxation. Foreign firms have for years used neighbouring United Arab Emirates as a springboard for their regional operations, including for Saudi Arabia.

SOURCE :- https://www.nasdaq.com/articles/saudi-arabia-offers-tax-breaks-for-companies-moving-regional-hqs-to-riyadh