Saudi Arabia’s strategic location at the intersection of Europe, Asia, and Africa is enhanced by a strong economy driven by ambitious reforms and investment opportunities, including significant development projects.
This unique combination makes the Kingdom a prime destination for multinational companies looking to establish regional headquarters and take advantage of the unprecedented opportunities presented by its dynamic economic landscape.
The new regulation for foreign companies will help boost the country’s non-oil economy and create more job opportunities in the largest economy of the Arab world.
The RHQ Program: A Vision 2030 Initiative
The Regional Headquarters (RHQ) program was introduced as a component of Saudi Arabia’s ambitious Vision 2030 and the National Investment Strategy. It is a joint initiative between the Ministry of Investment and the Royal Commission for Riyadh City.
The RHQ license is crucial for carrying out particular projects, especially those led by government authorities, especially the Public Investment Fund.
Aim of RHQ
The two primary aims of the RHQ are:
1. Attracting international corporations
The RHQ program actively promotes the relocation of global organizations’ regional headquarters to Saudi Arabia by providing various benefits and premium support services.
The Kingdom establishes itself as the perfect center for business growth.
2. Economy diversification
The RHQ Program plays a pivotal role in diversifying the economy. It serves as a cornerstone in Saudi Arabia’s economic diversification efforts. While the Kingdom aims to reduce dependency on oil revenues, the primary objective of the RHQ Program is to attract investments and establish itself as a dynamic business hub.
Key Benefits for RHQs
1. 30 years of corporate income tax exemption: RHQ entities receive a 30-year corporate income tax exemption from the license issuance date. Within this timeframe, they are subject to a 0% tax rate, offering a competitive advantage to businesses.
2. An unlimited number of visas for RHQ employees: RHQs can provide unlimited visas for their staff members, including executives, specialists, and support personnel. A streamlined visa procedure guarantees smooth operations.
3. No Saudization requirements: Unlike other companies operating in Saudi Arabia, RHQs are exempt from the requirement to maintain a specific percentage of Saudi nationals in their workforce.
4. Professional Accreditation Waiver: RHQ employees holding valid accreditations from their home countries are not required to obtain local professional accreditations, thus streamlining the hiring process and enabling skilled professionals to make an immediate impact.
5. MISA subscription waiver: Access MISA investor services centers with waived subscription fees and receive preferential treatment for MISA’s services. MISA License fees: SAR 2000 per year instead of SAR 62,000 per year.
Eligibility Criteria to apply for an RHQ License in KSA
Our firm can advise and provide support to ensure full compliance with and disclosure of the criteria below.
To qualify for the RHQ Program, companies must meet the following stringent criteria:
1. Global Footprint: The investor must demonstrate a substantial international presence and have at least two subsidiaries or branches in 2 different countries besides Saudi Arabia and its leading country of incorporation.
2. Strong financial statements: RHQs are required to possess positive and strong consolidated financial statements
3. Distinct legal identity: The RHQ must register as a foreign company in Saudi Arabia and maintain a physical office for transparency and accountability.
4. Operations beginning: Initiate RHQ operations within six months of receiving the license and conduct three optional licensed activities within the first operating year.
5. Strategic and administrative role: The RHQ is the region’s central administrative authority. While it does not directly engage in commercial activities, its primary roles revolve around the decision-making, coordination, and strategic planning of its regional subsidiaries.
6. Employment: The RHQ must hire full-time employees within the Kingdom, with at least one director being a Saudi resident. The RHQ must employ at least 15 employees, including at least three at the corporate executive level, ensuring that the RHQ is adequately staffed to fulfill its administrative functions.
Compliance requirements
Our firm can handle all compliance-related matters with the auditors to ensure appropriate and timely declarations and disclosures.
1. RHQ needs to adhere to all economic substance requirements consistently.
2. Ensure proper record-keeping and reporting, as Saudi authorities may review the records.
3. Pay taxes on specific payments not covered by tax exemption.
4. Submit annual tax returns and provide required disclosures to the Zakat, Tax, and Customs Authority (ZATCA).
5. Inform the Ministry of Investment and ZATCA about any significant operational or structural changes in the RHQ.
Conclusion
Saudi Arabia’s RHQ Program presents an exciting opportunity for multinational companies seeking expansion.
As you contemplate relocating your regional headquarters, remember that the Kingdom’s long-term stability, visionary leadership, and commitment to economic diversification make it an attractive destination for sustained growth.
Contact our local specialists if you need help with your licensing procedure or wish to explore your business opportunities in the Kingdom of Saudi Arabia.