Saudi Arabia has unveiled a bold move to entice foreign companies to establish their regional headquarters in the kingdom by introducing significant tax incentives. The initiative, announced on Tuesday, includes a noteworthy 30-year exemption for corporate income tax, marking a strategic effort to position Saudi Arabia as a preferred business destination.
This tax incentive package aligns with Saudi Arabia’s broader economic diversification plan, led by Crown Prince Mohammed bin Salman. In February 2021, the kingdom declared its intention to cease awarding government contracts to companies without regional headquarters in Saudi Arabia by January 1, 2024. The move is part of an ambitious strategy to reduce reliance on oil revenues and stimulate the creation of new industries, generating employment opportunities for Saudi citizens.
The tax exemption programme for regional headquarters encompasses a zero percent income tax rate for the regional entity and withholding tax on approved activities, spanning an impressive 30-year duration. The initiative aims to attract international companies and foster a conducive environment for their sustained growth in the kingdom.
According to the state news agency SPA, international companies will start benefiting from the tax exemption package from the date their licenses are issued. Saudi Investment Minister Khaled Al-Falih reported that the program has already attracted 200 foreign companies, highlighting the appeal of the kingdom’s business-friendly policies.
“The new tax exemptions granted on regional headquarters activities will give international companies in the kingdom more clarity of vision and stability,” remarked Saudi Finance Minister Mohammed Al-Jadaan, as reported by SPA. He added, “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.”
The tax incentives are poised to enhance the kingdom’s competitiveness with regional business hubs, particularly the United Arab Emirates. This move positions Saudi Arabia as an attractive destination for international companies seeking stability, vision, and growth opportunities.
As Saudi Arabia continues its drive towards economic transformation, the tax incentives signal a proactive approach to creating a business-friendly ecosystem that supports both local and international enterprises. The kingdom anticipates increased foreign investment and participation in major projects, bolstering its position on the global economic stage.
