Saudi Arabia Offers 30-Year Tax Break If Foreign Companies Setup Regional Headquarters

Saudi Arabia has announced its commitment to provide a tax break for foreign companies opting to establish their regional headquarters in the kingdom, offering an extraordinary 30-year exemption from corporate income tax.

This initiative, declared in February 2021, is aligned with Saudi Arabia’s broader strategy to disentangle its economy from heavy reliance on oil. As of January 1, 2024, the kingdom plans to exclusively award government contracts to companies with regional headquarters based within its borders—a move spearheaded by Crown Prince Mohammed bin Salman to diversify the economy and create job opportunities for Saudi citizens.

Jointly orchestrated by the Ministry of Investment and the Royal Commission for Riyadh City, the Saudi program is designed to entice international companies to make the kingdom their regional hub, positioning Saudi Arabia as the preferred choice in the Middle East and North Africa region. To achieve this goal, the program extends an enticing tax exemption package for regional headquarters.

The tax benefits include a zero percent income tax rate for the regional entity and a withholding tax exemption on approved activities for three decades. This bold move is aimed at providing clarity and stability, offering international companies a lucrative incentive to establish their presence in Saudi Arabia. The tax exemptions take effect from the date of license issuance.

According to the state news agency SPA, the program has already attracted 200 foreign companies, as reported by Saudi Investment Minister Khaled Al-Falih. Saudi Finance Minister Mohammed Al-Jadaan expressed optimism, stating that these tax incentives would offer international companies operating in the kingdom a clearer vision and increased stability.

“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,” added Jadaan.

In response to the kingdom’s announcement, foreign companies have been swift in adjusting to meet the relocation deadline set by Saudi Arabia in October. The tax incentives aim to solidify Saudi Arabia’s position as an attractive business destination, fostering economic diversification and global partnerships.