The Regional Headquarters (RHQ) Programme in Saudi Arabia (KSA) has seen an increase in numbers in recent years. This annual increase of established RHQs, which can be attributed to the attractive incentives the programme offers, aligns with the Kingdoms goals for the Vision 2030 initiative and the ongoing efforts to encourage economic diversification.

What is the Regional Headquarters Programme in Saudi Arabia?

The RHQ Programme in is an initiative by the Ministry of Investment (MISA) in Saudi Arabia which seeks to attract large multinational organisations to establish their headquarters for the region within the Kingdom. The aim is to position Saudi Arabia as a key investment and commercial hub in the Middle Eastern region. The RHQ programme provides companies a number of benefits and incentives to encourage them to consider setting up their base through MISA in KSA.

What are the incentives for setting up an RHQ in Saudi Arabia?

The initial key attractor, when the programme was initially announced in 2021, for establishing an RHQ in Saudi Arabia was that those businesses who join the programme, will find themselves eligible for government tenders and government contracts. If an organisation wanted to participate and bid for government contracted projects, then they would need to setup an RHQ to be considered, or risk forfeiting these contracts.

For those large multinational companies who are prepared to establish their RHQ in the Kingdom, they can enjoy tax reliefs in the form of a 30-year tax break. This involves being exempt from corporate tax and withholding tax for activities that have been approved as regional headquarters activities. Otherwise, companies operating within the Kingdom would be subject to 20% corporate tax and withholding tax ranging from 5-20% on a number of services.

In terms of other taxes, Saudi Arabia has VAT tax of 15%, with a few exemptions for certain financial services and some others. As for salary tax or income tax in Saudi Arabia, similar to neighbouring countries, there is currently no Saudi Arabian income tax, with no expected changes to this.

The benefits that these organisations will access, will effectively come into force from when they are issued the RHQ licence from MISA.

How many companies have setup a Regional Headquarters?

The benefits to establishing an RHQ can offer immediate and substantial benefits to those organisations making the move. These changes align with KSAs wider Vision 2030 strategy for economic diversification, development, and growth. There has been increased interest and numbers of multinational organisations obtaining a RHQ license each year. The KSA RHQ licence record per year is as follows:

• 2021: 44 RHQ companies
• 2022: 80 RHQ companies
• 2023: 180 RHQ companies

The target number of RHQs fully established within the Kingdom in line with the Vison 2030 goals is 480 RHQ companies. Therefore, it can be said that at this rate, that the Vision 2030 targets are on track to be achieved.

What is an Iqama in Saudi Arabia?

An Iqama in Saudi Arabia is the name given to the residency card or residency permit that must be obtained by those who wish to live and work within the Kingdom. It is required by the labour law in Saudi Arabia that all foreign workers obtain an Iqama. To obtain the Iqama, an individual must have sponsorship from their employer in the Kingdom. It is essential that, as part of the RHQ process, the employer obtains their Iqama and is responsible for their employees work visas and permits.

How can PRO Partner Group help?

At PRO Partner Group, we have a dedicated team on the ground in Saudi Arabia and the wider GCC, with experience in the corporate services industry in the region and key industry connections to help you with RHQ formation in KSA.

Establishing a RHQ in Saudi Arabia requires careful planning and adherence to regulatory requirements. PRO Partner Group can assist you in following these steps to best position your organisation for success in this thriving economy.

If you need assistance with this or any other related onshore or offshore company setup, restructuring, local partner or PRO support matter in Saudi Arabia, Abu Dhabi, Dubai, the wider UAE, Oman, or Qatar, then please do get in touch with us on +966 (0)535 377 578 for KSA or +971 (0)4 456 1761 for Dubai, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.