If implemented, businesses may risk exclusion from government contracts.
Saudi Arabia aims to stand firm on its ultimatum of foreign companies establishing their regional headquarters within the Kingdom by January 1, 2024. If implemented, businesses may risk exclusion from government contracts.
This initiative, announced in early 2021, seeks to generate more local job opportunities and address growing regional competition.
The decision reflects Saudi Arabia’s determination to position itself as a regional economic powerhouse. The Saudi Minister of Economy and Planning, Faisal Al Ibrahim, affirmed the government’s commitment and emphasised the ongoing plan and various incentives designed to assist companies during this pivotal transition.
As of Q3 2023, Saudi Arabia has issued licenses for more than 162 regional centres. The goal is to get 480 companies to open regional headquarters by 2030 to grow the Saudi economy.
- Companies must have a presence in more than two jurisdictions.
- Registered RHQs are required to showcase performance for their strategic decisions and management functions within six months of license issuance.
- RHQs are not allowed to conduct any commercial activities but can offer marketing support, training, and advisory services.
- Employ a minimum of 15 employees of which 3 to be of C-suite level.
Incentives for RHQs:
- Exemption from Saudization requirements for 10 years.
- Waiver of Professional Accreditation for some professions such as engineering, medicine, accounting, and investment.
- Exemptions on visa limits and acceleration in issuing them.
- Spouse work permits and dependent age extension to 25 years old.
With a thriving market and a young, dynamic population, the kingdom has become an attractive prospect for numerous international companies. This move, beyond being a mere policy shift, signifies a transformative era for both Saudi Arabia and the companies that choose to establish their presence within its borders.
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