Saudi Arabia is offering a 30-year tax break to multinational companies that establish their regional headquarters in the country, as part of its efforts to attract more foreign investment and diversify its economy. The tax package includes a zero percent rate for both corporate income tax and withholding tax related to approved regional headquarters activities. Currently, the kingdom imposes a corporate tax of 20 percent and charges withholding tax on various services. The tax relief will be granted from the day the companies obtain their regional headquarters license.
This move follows Saudi Arabia’s introduction of rules requiring foreign companies to set up regional headquarters in the country by the end of 2023 or risk losing out on government contracts. The tax incentives provide businesses with more visibility and certainty for future planning as they expand their presence in the region through Saudi Arabia. The Minister of Finance, Mohammed Al Jadaan, stated that the country looks forward to welcoming more multinational companies to participate in various sectors and upcoming events such as the 2029 Asian Winter Games and Expo 2030.
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The regional headquarters program, led by the Ministry of Investment and the Royal Commission for Riyadh City, aims to attract multinational companies by offering a range of benefits and premium support services. Since 2021, more than 200 companies have been licensed under the program. Minister of Investment, Khalid Al Falih, highlighted that the tax incentives, along with other benefits such as relaxed Saudization requirements and work permits for the spouses of regional headquarters executives, give multinational companies another reason to choose Saudi Arabia as their regional base of operations.
Saudi Arabia’s economy, which grew by 8.7 percent last year, is expected to expand by 0.8 percent this year, with non-oil economic growth anticipated to remain close to 5 percent on strong domestic demand. The country projects its non-oil economy to grow at 5.9 percent this year, driven by the trade, hospitality, and tourism sectors. Business activity in Saudi Arabia’s non-oil private sector remained robust in November, indicating positive economic momentum.