The Kingdom of Saudi Arabia is offering 30 years of tax relief for companies that choose to move their headquarters to the region.

Saudi Arabia’s 30-year tax relief program aligns with the kingdom’s strategic vision, aiming to stimulate economic growth and attract foreign investments. Companies relocating to Saudi Arabia can benefit from long-term tax exemptions, enhancing the overall business-friendly environment. The eligibility criteria for this relief should be thoroughly assessed. This initiative includes a zero percent rate for both corporate income tax and withholding tax related to the approved regional headquarters. The kingdom currently imposes a 20 percent corporate tax and withholding tax ranging from 5 percent to 20 percent on various services.

Overview of the Tax Relief Scheme

The tax relief program in Saudi Arabia offers a 30-year incentive for companies relocating their headquarters to the kingdom. It aims to attract multinationals and foreign workers, providing tax relief on corporate tax, income tax, and business activities. This initiative aligns with the strategic vision of the kingdom to boost economic growth and attract foreign investments. The program also contributes to the business-friendly environment in Saudi Arabia and is a part of the overall plan to enhance the kingdom’s economy.

What Is the Tax Relief Scheme in Saudi Arabia?

The tax relief scheme in Saudi Arabia grants eligible companies 30 years of tax relief, including corporate tax, income tax, and business activities. It is part of the government’s efforts to attract companies to the region.

The Purpose of the Tax Relief Scheme in Saudi Arabia?

The primary goal of the tax relief program in Saudi Arabia is to entice companies to move their headquarters, thereby boosting economic growth and attracting foreign investment. This measure is of utmost importance in improving the overall perspective of the Saudi Arabian economy.

The Impact of this scheme on Global Companies

According to the statement, global companies will start benefiting from tax relief as soon as they acquire their regional headquarters license. This tax concession comes in response to Saudi Arabia’s 2021 regulations that mandate foreign companies to establish regional headquarters in the country, including Qatar, by the end of this year or face potential exclusion from government contracts. Minister of Finance, Mohammed Al Jadaan, expressed that this new incentive provides businesses with greater visibility and certainty for future planning while they expand their presence in the region through Saudi Arabia and contribute to its transformation journey.

To diversify its economy away from oil, Saudi Arabia is working towards increasing foreign direct investment. As part of its Vision 2030 agenda, the kingdom aims to have 480 global companies establish their headquarters in the country by 2030, to boost economic output.

To attract multinational companies, the Ministry of Investment and the Royal Commission for Riyadh City have introduced the regional headquarters program. This initiative offers various benefits and premium support services to entice multinational companies. Since 2021, over 200 companies have already been licensed under this program.

According to Khalid Al Falih, Minister of Investment, multinational companies operating in the region are given yet another reason to choose Saudi Arabia as their regional headquarters due to tax incentives. In addition, there are other advantages such as relaxed Saudisation requirements and work permits for the spouses of regional headquarters executives.

Saudi Arabia has become an attractive destination for leading companies to establish their regional headquarters due to factors such as the kingdom’s long-term economic stability, young and skilled workforce, strategic location, and strong growth prospects. Additionally, many executives, entrepreneurs, and talented professionals are choosing Saudi Arabia as a place to advance their careers.

The International Monetary Fund reports that Saudi Arabia experienced a growth rate of 8.7% in its economy last year and is expected to see a 0.8% expansion this year. The non-oil sector is predicted to maintain a growth rate of approximately 5% due to robust domestic demand. Additionally, the Ministry of Finance has indicated that the country foresees a 5.9% growth in its non-oil economy this year, with sectors such as trade, hospitality, and tourism driving this growth..

In November, the non-oil private sector in Saudi Arabia continued to show a robust performance, as evidenced by the Riyad Bank purchasing managers’ index of 57.5. This reading indicates expansion and highlights the strength of the economy beyond the oil industry.

ALSO READ: Rules for corporate tax in United Arab Emirates

Benefits for Companies Relocating to Saudi Arabia

Upon relocating to Saudi Arabia, companies are poised to benefit from a 30-year tax relief program and gain access to business opportunities in the region, thereby enhancing their global outlook. The favorable tax return outlook provided by the tax relief scheme, which is available until December 2026, adds to the appeal of relocating companies. The scheme not only offers financial advantages but also opens doors to markets in the MENA region, positioning companies strategically in a thriving economic landscape starting in June 2023.

Financial Advantages

Companies that choose to relocate their headquarters to Saudi Arabia can enjoy a range of financial benefits. One of the key advantages is the 30-year tax relief granted by the government, which significantly reduces taxable income and offers a favorable income tax outlook for relocating companies. This incentive contributes to a positive internal revenue service perspective and provides substantial tax relief benefits. Such advantages align with the strategic goal of attracting foreign investment and fostering economic growth in the region.

Business Opportunities in Saudi Arabia

Relocating businesses to Saudi Arabia presents untapped business opportunities, attracting foreign investment and stimulating corporate tax benefits. The tax relief program opens doors to favorable business activities, offering income tax and financial advantages. Companies can explore the region’s markets, enhancing their international monetary fund outlook, particularly in key sectors of the economy. This move provides access to the MENA region, positioning businesses strategically in the Arabian Peninsula for growth and development.

Access to MENA Region Markets

Relocating companies can tap into lucrative markets in the MENA region, expanding their international outlook. The tax relief scheme offers access to business activities in the region, enhancing tax return outlook and supporting tapping into business opportunities within the MENA region. This initiative enables companies to gain a foothold in the market and benefit from the potential growth and development in the region, creating an advantageous position for international expansion and revenue generation.

Is Your Company Ready for the Big Move to Saudi Arabia?

Considering relocating your business activities to Saudi Arabia? Ensure a successful move by understanding the country’s tax implications. Analyze taxable income, incentives, and returns. The Ministry of Finance provides essential tax-related information.

Conclusion

In conclusion, relocating your company’s headquarters to Saudi Arabia can offer significant benefits in terms of tax relief and business opportunities. The 30-year tax relief scheme provided by the Saudi government is a lucrative incentive for companies seeking to expand their operations. By taking advantage of this scheme, you can enjoy financial advantages, access to the MENA region markets, and the opportunity to be a part of the thriving Saudi Arabian economy. However, it is important to understand the country’s business culture, legal framework, and infrastructure before making the move. Assessing the readiness of your company and addressing potential challenges will ensure a smooth transition. If you are considering this move, consult with our experts who can guide you through the process and help you make an informed decision.

About Arnifi

Arnifi is digital first Corporate service provider helping companies enter the Middle East region, starting with UAE and Saudi Arabia markets. Founded and backed by professionals from Amazon, Souq and other large companies operating in KSA – the team understands what it takes to succeed as a startup in both UAE and Saudi Arabian markets, apart from going through the setup process multiple times. Arnifi will provide a truly digital experience to entry and scale up of companies both UAE and Saudi Arabia. The Arnifi promise is simple, yet revolutionary, use technology and a great team to provide transparency, efficiency and great customer experience in the whole process. Check out at – www.Arnifi.com for more details.

ALSO READ: Industrial license and its rules & requirements in KSA