Saudi Arabia’s initiative to entice international businesses with its regional headquarters program is gaining traction. Initiated in 2024, this ambitious program incentivizes global corporations to establish their regional headquarters in the kingdom.

Over 120 global companies were recently allowed to move their regional offices to Saudi Arabia in the first quarter of 2024, a staggering 477% increase from the previous year.

In its quarterly analysis, the Ministry of Investment in Saudi Arabia indicated that issuing 127 licenses in the year’s first three months highlights the kingdom’s appealing business climate.

Saudi Arabia’s efforts to lure regional headquarters align with the Vision 2030 goal to diversify the economy. The country offers enticing tax benefits for international corporations that obtain a relocation license. These incentives comprise a 30-year relief from corporate income tax and withholding tax for headquarters operations and various discounts and support services.

Newly enacted legislation in Saudi Arabia mandates that firms holding government contracts establish a regional office in the country and staff it with at least 15 employees.

The Ministry of Investment reported processing 445 investor visit visa applications in the first quarter of the year, facilitating the arrival of foreign investors to scout opportunities in Saudi Arabia.

Furthermore, the ministry finalized 64 investment agreements during the same period. The total number of investment licenses granted soared to 3,157 in the first quarter, a significant 92.9% increase from the year before. The construction sector was granted 864 licenses, making it the leading investment area, followed by the manufacturing sector with 620 permits.

About 396 ventures received licenses for vocational, educational, and technical activities, while the information and communication technologies sector received 263 licenses.

Numerous other sectors, including hospitality, retail and wholesale, and real estate, also saw the notable issuance of investment licenses.

“In Q1 2024, real estate recorded the highest growth in investment licenses by 253.3% year-on-year, followed by vocational, educational, and technical activities, and agriculture, forestry, and fishing by 141.5% and 129.4%, respectively,” said the ministry.

Additionally, over 58,000 transactions were executed via the ministry’s digital platform in the first quarter, reflecting a 29% increase over the same timeframe the previous year.

A May report by S&P Global noted that introducing free economic zones and the regional headquarters program could bolster foreign direct investment into Saudi Arabia.

“Future FDI inflows could offer upside on the back of growing investment opportunities and government efforts to improve regulatory and business conditions. These efforts include opening free economic zones and a 30-year tax break for multinational companies opening regional headquarters in the country,” said the credit rating agency.  

In February, the kingdom’s Small and Medium Enterprises General Authority released a report emphasizing the significant role of Saudi Arabia’s Regional Headquarters Program in propelling Riyadh’s economic expansion.

Lastly, in November 2023, the Minister of Investment, Khalid Al-Falih, revealed that Saudi Arabia exceeded its aim in drawing regional headquarters to its shores, with over 180 businesses now established in the kingdom.