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Saudi Arabia sets conditions for 30-year tax exemptions for MNCs

Companies need a valid license, substantial Saudi assets, and approved revenue streams to qualify for tax exemption.

Saudi Arabia sets conditions for 30-year tax exemptions for MNCs
[Source photo: Anvita Gupta/Fast Company Middle East]

As part of its efforts to attract foreign investment and solidify its position as a regional business hub, Saudi Arabia has launched a new incentive for multinational companies (MNCs).

MNCs setting up regional headquarters (HQs) in Saudi Arabia can now unlock a 30-year tax break, with the official terms and conditions finally published on 16 February.

The incentive, announced in December 2023, offers eligible firms a 0% corporate income tax and withholding tax rate for three decades. However, there’s a catch: meeting specific criteria.

This includes having a valid license, maintaining substantial assets and operational expenses in Saudi Arabia, and generating revenue from approved activities within the country.

Failure to meet these requirements could lead to penalties, fines, or even the loss of the tax break. The Zakat, Tax, and Customs Authority will monitor compliance, ensuring companies play by the rules.

The government also announced it would no longer award contracts to foreign companies with Middle Eastern HQs outside Saudi Arabia, starting January 1, 2024. 

Riyadh saw the establishment of regional HQs for over 200 international firms, rendering them eligible to bid for government contracts in Saudi Arabia.

This move and the tax break incentivize companies to relocate their regional operations to Riyadh.

The perks extend beyond tax relief. Companies will benefit from relaxed “Saudization” requirements (hiring local workers) and streamlined work permits for spouses of executives.

Companies like Northern Trust, Bechtel, Pepsico, IHG Hotels and Resorts, PwC, and Deloitte have already set up their regional HQs in Riyadh.

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