Tax Incentives in Riyadh: Saudi Arabia Encourages Regional HQ Relocation with Tax Breaks

On December 5, 2023, Saudi Arabia made a significant announcement that could pleasantly surprise global businessmen. The country's authorities are set to offer tax incentives, including a 30-year exemption from corporate income tax, to foreign companies establishing their regional headquarters within the kingdom.

As far back as February 2021, the world's leading oil exporter announced its intentions to cease government contract awards to companies without regional headquarters in Saudi Arabia by January 1, 2024. This move aims to stimulate industries beyond oil production and generate new employment opportunities. Consequently, heightened competition between Saudi Arabia and the UAE in attracting foreign companies is anticipated.

International companies establishing offices in the kingdom will benefit from tax advantages immediately upon licensing. They will enjoy a 30-year exemption from income tax of the regional entities and for the withholding tax on their approved activities. 

Over 200 foreign companies have already displayed interest in setting up their regional headquarters in Saudi Arabia. The country is looking forward to drawing numerous companies from diverse countries and sectors, particularly in anticipation of major international events like the 2029 Asian Winter Games and Expo 2030.

Despite the promising prospects of this initiative, not all entrepreneurs are rushing to register due to concerns about regulations, especially concerning taxation. Many still prefer opening companies in the UAE, which has no intentions of relinquishing its position.