King Abdullah Financial District (KAFD) business district in the Saudi capital Riyadh. (Credit: AFP)
The latest package includes a zero per cent rate for corporate tax and withholding tax for 30 years. Companies will benefit from the tax relief as soon as they obtain their Regional Headquarters (RHQ) license, the Saudi Press Agency (SPA) statement said.
“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,” said Saudi Minister of Investment Khalid Al-Falih in the statement.
The Kingdom had previously announced plans to stop awarding government contracts to multinationals whose regional headquarters are not located in its capital by Jan. 1, 2024.
Launched in February 2021, the Regional Headquarters (RHQ) program aims to attract foreign companies to establish their regional headquarters in the Kingdom. It hopes to become the leading commercial and investment hub in the MENA region amid fierce economic competition with its neighboring countries, especially the United Arab Emirates, with Dubai currently qualifying as the financial hub of the Gulf.
The RHQ program constitutes yet another initiative under Vision 2030, a campaign launched by Saudi Arabia to attract foreign investments and high skilled workers, as well as create a thriving, diversified economy by providing a supportive environment for businesses of all sizes.
The program has attracted over 200 companies to the Kingdom since its inception. In the SPA statement regarding the latest tax package, it was not specified whether the MNCs which had already established their headquarters in Saudi Arabia would benefit from the measure.
“This new incentive gives businesses more visibility and certainty for future planning as MNCs expand their presence in the region through Saudi Arabia, while also taking part in our own transformation journey," added Saudi Minister of Finance Mohammed Al-Jaadan in the statement.