Saudi Arabia Proposes 30-Year Tax Relief Plan to Attract Regional Business Headquarters

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DUBAI, United Arab Emirates (AP) — Saudi Arabia has announced a 30-year tax-free program for foreign corporations that set up regional headquarters in the kingdom, the latest move in its competitive crusade to attract foreign investment and labor.

“Saudi Arabia’s Ministry of Investment, in coordination with the Ministry of Finance and the Zakat, Tax and Customs Authority, today announced a 30-year tax incentive program for the Regional Headquarters Program (RHQ), to further streamline the procedure for multinational companies (MNEs) to identify their RHQ in Saudi Arabia,” The Saudi state news firm wrote in a statement on Tuesday.

The offer includes a 0% corporate tax rate for 30 years, which will be implemented to corporations “from the day they received their RHQ licence”, he said.

The program “aims to engage multinationals to identify their headquarters in Saudi Arabia and position the Kingdom as the leading trade, trade and investment hub in the MENA region, providing a diversity of benefits and high-level support facilities that complement the Kingdom’s competitive pricing. “proposal on a global scale,” he added.

The kingdom grabbed investor attention and sparked controversy in February 2021 when it first announced its RHQ campaign, declaring that any foreign company that did not have its regional headquarters office in Saudi Arabia by the start of 2024 would be barred from doing business with state entities.

The news stunned expat investors and workers, many of whom saw the move as an attack on Dubai, the advertising capital of the United Arab Emirates that is home to the concentration of regional headquarters in the Middle East.

In October this year, Saudi ministers made it clear that the ultimatum still stands: foreign corporations will have to identify their regional headquarters in the kingdom by January 1, 2024, or face a ban on lucrative government contracts.

Many foreign investors remain skeptical about the ability of Saudi Arabia — a notoriously conservative Muslim theocracy known for its much-criticized human rights record — to attract enough foreign talent.

Expats at the Dubai regional headquarters wonder if the kingdom is capable of offering enough quality-of-life services, such as foreign schools, plenty of housing, and facets of a more Western lifestyle, such as alcohol, which has lately been illegal in Saudi Arabia.

Saudi Arabia says the RHQ program has so far allowed more than two hundred corporations to operate their regional headquarters in the kingdom. And in obvious reaction to considerations by many expatriate employees that families would have difficulty finding schools abroad for their children, “seven K-12 foreign schools have announced the opening of their new campuses in the Kingdom,” the Agency said. Saudi Press in a statement.

“The tax incentive provides multinational corporations operating in the region with an additional explanation for why they should set up their regional headquarters in Saudi Arabia, in addition to other benefits such as the rest of the Saudization needs and painting permits for the spouses of RHQ leaders,” Saudi Investment said. This was quoted by Minister Khalid. Al-Falih through the SPA.

The kingdom’s regional HQ drive is a part of Vision 2030, an ambitious campaign launched by Crown Prince Mohammed bin Salman in 2016, which aims to create private sector jobs and diversify its economy away from oil as Saudi Arabia’s population — more than 60% of whom are under the age of 30 — grows.

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