Saudi Arabia will offer a 30-year tax break as an incentive for global companies that move their regional headquarters to the kingdom as it seeks to attract more multinationals amid a diversification push.
The package includes a zero per cent rate for both corporate income tax as well as withholding tax related to the “approved regional headquarters activities”, the Ministry of Investment, Ministry of Finance and the Zakat, Tax and Customs Authority said in a statement on Tuesday.
The kingdom currently imposes corporate tax of 20 per cent, along with charging withholding tax (the amount deducted from an employee's gross salary that is paid by the employer to the government) on various services ranging from 5 per cent to 20 per cent.
Global companies will benefit from the tax relief from the day they obtain their regional headquarters licence, the statement said.
The tax concession move follows Saudi Arabia's introduction of rules in 2021 requiring foreign companies to set up regional headquarters in the country by the end of this year or risk losing out on government contracts.
“This new incentive gives business more visibility and certainty for future planning as MNCs [multinational corporations] expand their presence in the region through Saudi Arabia while also taking part in our own transformation journey,” Mohammed Al Jadaan, Minister of Finance, said.
“We look forward to welcoming more MNCs to participate in projects across all sectors, including our giga-projects and in preparation for the hosting of such events as the 2029 Asian Winter Games and Expo 2030.”
Saudi Arabia is aiming to boost foreign direct investment as part of its Vision 2030 agenda to diversify its economy away from oil. The kingdom hopes to have 480 global companies establish headquarters in the kingdom by 2030 amid efforts to boost economic output.
The regional headquarters programme, an initiative 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.
The programme has licensed more than 200 companies since 2021.
“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 Saudisation requirements and work permits for the spouses of RHQ [reginal headquarters] executives,” said Khalid Al Falih, Minister of Investment.
“The kingdom’s long-term economic stability, young and skilled workforce, strategic location and strong growth prospects have already attracted the world’s leading companies to pick Saudi Arabia as their new regional base of operations, while an even greater number of executives, entrepreneurs and talented professionals … are finding the kingdom a most attractive place to advance their careers.”
Saudi Arabia’s economy, which grew by 8.7 per cent last year, is expected to expand by 0.8 per cent this year, with non-oil economic growth anticipated to remain close to 5 per cent this year on strong domestic demand, according to the International Monetary Fund.
Saudi Arabia projects its non-oil economy to grow at 5.9 per cent this year, driven by the trade, hospitality and tourism sectors, the Ministry of Finance said in a preliminary budget statement in October.
Business activity in Saudi Arabia's non-oil private sector economy remained robust in November, with the headline Riyad Bank purchasing managers' index at 57.5 last month, well above the 50-point neutral mark that separates expansion from contraction.
New orders and output, the two largest contributors to the headline index, rose markedly in November, the report found.
COMPANY PROFILE
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
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Global state-owned investor ranking by size
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Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
