Saudi Minister of Finance Mohammed Bin Abdullah Al-Jadaan attends the G20 Finance Ministers and Central Bank Governors Meeting in Nusa Dua, Bali, Indonesia, 15 July 2022. Made Nagi/Pool via REUTERS/File photo
RIYADH – Saudi Arabia said on Tuesday it will offer tax incentives for foreign companies that locate their regional headquarters in the kingdom, including a 30-year exemption for corporate income tax.
The world’s top oil exporter announced in February 2021 plans to cease awarding government contracts to companies whose regional headquarters are not located in the kingdom by Jan. 1, 2024.
The ultimatum, part of efforts by Crown Prince Mohammed bin Salman to wean the economy off oil by creating new industries that would generate jobs for Saudis, has escalated the kingdom’s competition with regional business hub the United Arab Emirates.
The tax exemption package for regional headquarters includes a zero percent rate for the income tax of the regional entity and for the withholding tax on approved activities of those entities for 30 years, state news agency SPA reported.
International companies will benefit from the tax exemption package starting from the date their licenses are issued, it added.
The program has so far attracted 200 foreign companies, Saudi Investment minister Khaled Al-Falih was quoted as saying.
“The new tax exemptions granted on regional headquarters activities will give …. international companies in the kingdom more clarity of vision and stability,” Saudi Finance Minister Mohammed Al-Jadaan said, according to SPA.
“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,” Jadaan added.
Foreign companies have scrambled to meet the Saudi condition to relocate their regional headquarters after the kingdom said in October the deadline will be enforced.
However some companies have raised concerns over the regulatory framework, including taxation.
Foreign firms have for years used neighboring United Arab Emirates as a springboard for their regional operations, including for Saudi Arabia.