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Saudi Regional Headquarters: Incentives, Requirements & Process

  • RHQ Program in Saudi Arabia
  • Premium Residency for Regional HQ Executives
  • Incentives for the Saudi Regional Headquarters
  • Requirements and Rules for the RHQ Program
  • Regulation Exemptions in the RHQ Program
  • Process of Establishing an RHQ in Saudi Arabia
  • Establish Your Regional Headquarters in Saudi Arabia

RHQ Program in Saudi Arabia

Saudi Arabia, being the leading commercial, industrial, and investment hub for the MENA region, offers a range of benefits and premium support services for foreign businesses. The Kingdom aims to have 480 global companies set up headquarters by 2030. Starting January 1, 2024, only companies with regional headquarters in the Kingdom will be eligible to secure government contracts.

The RHQ Program encourages multinational companies in the Middle East and North Africa (MENA) to establish their regional headquarters in Saudi Arabia (KSA). Led by the Ministry of Investment and the Royal Commission for Riyadh City, the initiative offers significant incentives, including a 30-year tax break, to attract these companies. It’s designed to boost sectors such as real estate, finance, tourism, and communications sectors, strengthening Saudi Arabia’s role as a key regional center.

Premium Residency for Regional HQ Executives

The Premium Residency program for executives of Regional Headquarters (RHQ) in Saudi Arabia offers significant benefits, enhancing the attractiveness of the Kingdom for foreign nationals. Key features of this program include:

Residential and Employment Freedom: Premium Residency allows holders and their eligible family members to live, work, and invest in Saudi Arabia, with the flexibility to change jobs within the private sector.

Property Ownership Rights: Premium Residency grants the right to own residential, commercial, and industrial properties throughout the Kingdom, except in Mecca, Madina, and border areas.

Vehicle Ownership: Holders can own and license vehicles in Saudi Arabia.

Family Visit Visa: The program facilitates the issuance of visit visas for family members, including parents, grandparents, grandchildren, siblings, and their children.

Investment Opportunities: Premium Residency provides the right to invest in the Saudi Capital Market.

Workforce Management: Holders can recruit foreign domestic workers and manage their residency arrangements.

Travel Flexibility: Premium Residency includes the freedom to enter and exit the Kingdom freely, with access to lanes designated for Saudi citizens at airports.

Continuation for Family: In case of the primary holder’s death, the spouse and children under 21 retain their premium residency rights and benefits.

This initiative, overseen by the Ministry of Investment in coordination with the Premium Residency Center, is designed to attract and retain top global talent by offering a high degree of personal and professional flexibility and security.

Incentives for the Saudi Regional Headquarters

In addition to the prospect of government contracts, the Saudi Arabian RHQ program offers a suite of six key incentives for multinational corporations considering the relocation of their regional headquarters:

Saudization Exemption: These corporations will be exempt from the usual Saudization quotas for a decade, which mandate a certain percentage of local hires.

Professional Accreditation Waivers: Certain professions, including engineering, medicine, accounting, and investment, will benefit from relaxed accreditation requirements.

Visa Advantages: This includes an exemption from visa limits and expedited processing.

Family Considerations: The program extends work permit eligibility to spouses and raises the age limit for dependent children to 25 years.

Comprehensive Services: The holders of RHQ licenses will enjoy a range of services to meet their business, personal, and concierge needs.

Extended Tax Relief: Corporations will enjoy a 30-year exemption from corporate income tax and withholding taxes related to the RHQ starting from the date the license is issued.

Requirements and Rules for the RHQ Program

To participate in the RHQ program, multinational companies must meet specific criteria, emphasizing physical presence and operational scope, particularly in the MENA region. Key requirements and rules include:

Global Presence: Companies must have established operations in at least two countries, not counting Saudi Arabia or the country where their main headquarters are located.

Operational Timelines: There are set deadlines within which a corporation registered under the RHQ program must commence its allowed activities.

Activity Limitations: The scope of activities for RHQ-established entities is limited to strategic, management-related, or elective tasks, mainly focused on overseeing their MENA region branches. Entities must undertake at least three optional activities, ranging from sales and marketing support to human resources and personnel management.

Registration as a Foreign Entity: Entities must be registered as foreign companies in Saudi Arabia.

Separate Legal Identity: They must have a distinct legal identity in Saudi Arabia.

Physical Office Requirement: A physical office must be established in Saudi Arabia to serve as a central administrative hub for the region.

Restriction on Commercial Operations: Entities are prohibited from engaging in revenue-generating commercial activities.

Financial Transparency: Submitting audited financial statements for at least two branches covering the previous 12 months is mandatory.

Regulation Exemptions in the RHQ Program

The regulations governing the RHQ program in Saudi Arabia outline specific scenarios under which government projects or procurements are exempt from the standard rules. These exemptions apply in the following situations:

  1. Value Threshold: Projects or procurements valued under SAR 1 million (subject to change) or those executed outside Saudi Arabia are exempt.
  2. Limited Exceptions for Contracting: Government agencies can contract with companies lacking an RHQ in Saudi Arabia in certain cases:
  • If there’s only one technically acceptable offer.
  • When an offer from a non-RHQ company is technically superior and is priced either less than 25% or more than the value of the second-best offer.
  • If only one qualified RHQ company exists for a specific work requirement.
  • In emergencies, posing a severe and unforeseen threat to public safety or health or risking significant property or life loss.
  • When certain works or procurements can only be serviced by companies without an RHQ in Saudi Arabia.
  • Reporting Requirements: Agencies utilizing these exceptions must prepare a report detailing their reasons for contracting with non-RHQ companies. This report, due within 30 business days of contract signing, must be submitted to the KSA General Auditing Bureau and the Expenditure and Project Efficiency Authority.
  1. Special Exemptions: Government agencies may apply for exemptions for specific companies for certain periods or projects. A special committee evaluates these applications based on the regulations and public interest, with the authority to accept or reject them.

These provisions indicate a flexible approach within the RHQ program, allowing for exceptions when necessary while maintaining a framework of accountability and oversight.

Process of Establishing an RHQ in Saudi Arabia

The establishment of a Regional Headquarters (RHQ) in Saudi Arabia involves a streamlined two-stage procedure designed to facilitate the entry of foreign investors:

  1. MISA License Application:

The first step is to apply for a license from the Saudi Arabian Ministry of Investment (MISA). MISA plays a crucial role in simplifying the licensing process for foreign investors.

  • Incorporation of the RHQ Entity:

Once the MISA license is obtained, the next step is formally incorporating the RHQ in Saudi Arabia. The RHQ can be set up as a branch office or a limited liability company, depending on the business’s needs and preferences.

The incorporation process is investor-friendly as MISA has implemented several measures to facilitate it. The usual attestation requirements for documents originating from outside Saudi Arabia have been waived. This significantly reduces the administrative burden and speeds up the application process. MISA is working with the Saudi Ministry of Commerce to expedite the commercial registration. This collaboration aims to streamline the incorporation stage, ensuring a more efficient and less time-consuming process for establishing an RHQ in the Kingdom.

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