Saudi Arabia is set to entice global companies to relocate their regional headquarters to the Kingdom by offering an unprecedented 30-year tax break, a move aimed at bolstering foreign direct investment and supporting its economic diversification goals under Vision 2030.
As part of the incentive package, the Ministry of Investment, Ministry of Finance, and the Zakat, Tax and Customs Authority announced a zero per cent corporate income tax rate and withholding tax for approved regional headquarters activities.
This stands in stark contrast to the current corporate tax of 20 per cent and withholding tax ranging from 5 to 20 per cent on various services.
The tax relief will be granted to global companies from the day they secure their regional headquarters license. This initiative follows the introduction of rules in 2021 mandating foreign companies to establish regional headquarters in Saudi Arabia by the year’s end or risk losing government contracts.
The Vision 2030 agenda aims to diversify the Saudi economy away from oil, to attract 480 global companies to establish headquarters in the Kingdom by 2030. The regional headquarters program, led by the Ministry of Investment and the Royal Commission for Riyadh City, has already licensed over 200 companies since its inception in 2021.
Saudi Arabia, with its stable long-term economic outlook, young and skilled workforce, strategic location, and strong growth prospects, is attracting leading global companies. The Kingdom’s economy, which grew by 8.7 per cent last year, is projected to expand by 0.8 per cent this year, with non-oil economic growth expected to remain close to 5 per cent.
The focus on sectors like trade, hospitality, and tourism is driving the anticipated 5.9 per cent growth in the non-oil economy this year, as outlined in the Ministry of Finance’s preliminary budget statement in October.
