30-Year Tax Breaks for Regional Headquarters in Saudi Arabia

In February 2021, Saudi Arabia announced its intention to cease awarding government contracts to companies whose regional headquarters are located outside the country starting January 1, 2024, with certain exceptions.

The program to attract international companies to establish regional headquarters in Saudi Arabia is a joint initiative of the Ministry of Investments and the Royal Commission of Riyadh. The program aims to draw international companies to establish regional headquarters in Saudi Arabia, positioning the Kingdom as the primary choice for such companies in the Middle East and North Africa region by offering a range of advantages and unique support conditions.

The latest update from PwC revealed recent uncertainty regarding the tax regime of this program. However, today, the state information agency announced a package of tax incentives, including a 30-year exemption from corporate income tax.

This package provides several benefits, such as a 0% corporate income tax rate for approved activities and a 0% source tax rate for payments to related and unrelated parties. The standard corporate income tax rate is 20%, but this program offers a complete exemption for 30 years.

These incentives will take effect from the issuance of licenses to international companies. According to Saudi Arabia’s Minister of Investments, Khalid Al-Falih, as of now, 200 foreign companies are already participating in the program.

Further details are still awaited, including aspects related to the activities of regional headquarters under the license and the tax implications. Nevertheless, the proposed tax breaks seem appealing to companies desiring regional headquarters in the country, providing flexibility and certain advantages for operations within the region.

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