Saudi Arabia’s Minister of Investment Khalid Al-Falih has stated that multinationals relocating their regional headquarters to Saudi Arabia this year are more likely to get tax exemption, according to a report by the Saudi Gazette.
The report, citing the minister in talks with British newspaper Financial Times, said multinational companies are exempt from taxes, provided they relocated their regional headquarters to the kingdom this year with the aim of securing lucrative government contracts.
Saudi Arabia’s tax move
They will be taxed, only for limited profits, Al-Falih said, adding that, most likely those companies will be granted tax relief.
Al-Falih also added that an announcement will be “issued soon to clarify the regulations for the multinational companies.”
“Business is going on as usual for us here inside and outside Saudi Arabia” Al-Falih said adding the operations outside Saudi Arabia will be taxed in those entities’ country of operations, and will not be intermingled or mixed with the regional headquarters in the kingdom.
The move is part of the Regional Headquarters Program (RHQ), which is a joint initiative between the Ministry of Investments and the Royal Commission for Riyadh City. The program invites global companies to move their regional headquarters to Saudi Arabia.
Al-Falih also added that Saudi Arabia does not want to incur additional costs for companies, and “have realised that they have to do everything they can through policy and regulation to ensure that companies do not incur additional risks or costs from alternative jurisdictions for managing their regional operations, and the biggest one of course is taxation,” according to the report.
Saudi Arabia, which is the largest economy in the Middle East and North Africa (MENA) region, the report said, has unveiled a plan to reduce its dependence on oil revenues by making the country a center for finance and trade.
To attract multinational companies, the kingdom’s major firms plan to invest hundreds of billions of dollars in new projects over the next decade.
About 80 companies, including Siemens and Unilever, have received licenses to move their regional headquarters to Saudi Arabia, with many expected to be based in Riyadh’s King Abdullah Financial District, the report said, adding that PepsiCo recently announced that it had relocated its Middle East chief executive’s office to the country.
Saudi Arabia, which has a 20 percent corporate income tax, is offering incentives to attract foreign businesses, such as exemptions on visa limits and recruitment quotas for Saudi nationals for 10 years.
The Saudi government hopes that by creating a favorable business environment, it can boost economic growth and create more job opportunities for Saudi citizens.
The regional headquarters scheme and Invest in Saudi initiative is part of a broader plan to diversify the country’s economy and reduce its dependence on oil exports, which currently account for more than half of the kingdom’s GDP.
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