The Saudi Arabian government announced a new economic incentive for international companies that move their headquarters to the country’s capital, Riyadh, declaring that any company that relocates can receive a 30-year tax exemption package.
The move is in line with the Kingdom’s recent attempts to attract foreign investment to diversify the dominated Saudi economy beyond oil.
The de facto leader of Saudi Arabia, Crown Prince Mohammed bin Salman, has made serious efforts in recent years to turn the country into a viable alternative to the United Arab Emirates as a regional hub of finance, industry, and trade. In 2021, the Kingdom announced that the government would cease awarding government contracts to any companies that did not relocate their regional headquarters to the country by 2024.
Saudi state-controlled media reported that the tax break package would include a zero percent income tax on the entity itself and a zero percent withholding tax rate for all approved activities conducted by the entities.
The new tax structure is designed to go into effect as soon as the company’s business license is issued.
Providing corporations “more clarity of vision and stability”
Regarding the new policy, Saudi Finance Minister Mohammed Al-Jadaan said the tax incentives will provide newly arrived multinational corporations in the kingdom “more clarity of vision and stability.”
The timing of the Saudi announcement comes only a little over a week after the country won its bid to host Expo 2030, with Al-Jadaan referencing such, stating:
"We look forward to welcoming more international companies to participate in projects in all sectors, including mega projects, and our preparations to host major events such as the Asian Winter Games in 2029, and the Expo 2030.”
After reiterating the relocation requirement would be enforced, foreign companies operating on government contracts in the Kingdom have been rushing to meet to get licensed before the December 1, 2024, deadline.