🇸🇦 Saudi Arabia11m
🇸🇦 Saudi ArabiaMarket Entry9 min read5 April 2024
Saudi Arabia Regional Headquarters Programme: The Complete Advisory Guide
Saudi Arabia's Regional Headquarters Programme requires multinationals to relocate their MENA headquarters to Riyadh by 2024. This guide explains the obligations, the 10-year tax holiday, and the strategic considerations for global companies.
The RHQ Mandate and Its Strategic Implications
In 2021, Saudi Arabia announced that multinationals seeking government contracts must relocate their regional headquarters from Dubai, Bahrain, or other GCC cities to Riyadh by 1 January 2024. The policy, backed by Crown Prince Mohammed bin Salman, is designed to capture the economic value of corporate headquarters that had been domiciled outside the Kingdom.
The implications for global companies are significant. Failure to establish an RHQ risks exclusion from over $3 trillion in projected government and quasi-government spending under Vision 2030. More than 200 multinationals have already received RHQ licences, including PwC, Deloitte, Siemens, Bosch, and dozens of global financial institutions.
Qualifying for the RHQ Tax Incentive
The 10-year tax holiday is contingent on maintaining genuine Regional Headquarters substance. MISA and the Zakat, Tax and Customs Authority (ZATCA) assess substance through: the number of qualified employees in Saudi Arabia; the level of decision-making authority held locally; evidence of genuine MENA management functions; and the ratio of Saudi-to-total-employee headcount (Saudization targets).
- Minimum 15 full-time qualified employees in the RHQ
- C-suite or senior management physically present in Riyadh
- Annual RHQ activity report submitted to MISA
- Progressive Saudization: 25–40% Saudi employees by year 3–5
- 0% CIT and WHT for 10 years on qualifying income
Frequently Asked Questions
What is the deadline for the RHQ requirement?
The Saudi government announced that from 1 January 2024, foreign companies wishing to bid for government contracts must have an RHQ in Saudi Arabia. The rule applies progressively and ILS Consultancy recommends establishing the RHQ immediately to avoid disqualification.
What does the 10-year tax holiday cover?
Qualifying RHQ entities benefit from 0% corporate income tax and 0% withholding tax on dividends, management fees, and certain service payments for 10 years from the date of RHQ licence issuance.
How many employees are required for an RHQ?
The RHQ must employ a minimum number of qualified executives (typically a minimum of 15 full-time employees) and maintain genuine decision-making functions in Saudi Arabia. Saudization (Nitaqat) targets apply from year two.
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