Saudi Arabia Unveils 30-Year Tax Breaks for RHQs

Foreign companies establishing regional headquarters (RHQ) in Saudi Arabia can now access a package of long-term tax exemptions, alongside new incentives targeting logistics operations and Special Economic Zones. The RHQ tax rules came into force on 16 February 2024.

Under the scheme, a licensed RHQ pays 0% corporate income tax on qualifying income for 30 years from the date its licence is issued, with the possibility of renewing the period for another 30 years. A 0% withholding tax also applies for the same period on dividend payments to non-residents, payments to related parties, and payments for services necessary to RHQ activities. Outside these incentives, the standard corporate income tax on foreign-owned shares remains 20%, while Saudi and GCC shares are generally subject to 2.5% zakat.

To qualify, a company must be licensed as an RHQ through the Ministry of Investment and meet minimum substance requirements. These include headquarters-level decision-making, performing defined strategic and managerial activities for at least three foreign affiliates, and reaching at least 15 employees — including executives — by the fifth year.

Why it matters

Since 1 January 2024, foreign companies without a licensed RHQ in the Kingdom have been barred from government contracts worth SAR 1,000,000 or more, while RHQ entities gain priority in public tenders. RHQs also receive up to a 10-year exemption from standard Saudization quotas, the ability to apply for unlimited work visas with faster issuance, and streamlined permits for executives' spouses.

Beyond headquarters, Special Economic Zones — including Jazan, King Abdullah Economic City, Ras Al-Khair, and the Cloud Computing SEZ — offer 5% corporate income tax for up to 20 years, customs relief, and more flexible rules for foreign talent. Less-developed regions can access additional concessions for 10 years. From 2026, withholding tax on technical and consulting payments to head offices and group companies drops from 15% to 5%, a change expected to ease costs for many international businesses operating locally.

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