Looking for assistance with RHQs (Regional Headquarters) in KSA? Get in touch with us today.
We can help you with RHQs (Regional Headquarters) in KSA. Contact the team at CBD today.
Overview
Coming into effect on January 1, 2024, the KSA (Kingdom of Saudi Arabia) had announced its strategically developed RHQ Programme. The programme, jointly overseen by the MISA (Ministry of Investment Saudi Arabia) and the RCRC (Royal Commission for Riyadh City), aims to incentivise MNCs (multinational corporations) to establish or relocate their RHQ to Saudi Arabia, becoming a cornerstone in its Vision 2030 initiative.
This article will provide a detailed explanation of KSA’s RHQ Programme, including its definitions and considerations, requirements, key benefits and incentives, and registration process for forming a Saudi Arabian RHQ.
Definitions and Considerations for RHQs in KSA
The KSA defines RHQs as a unit of a Multinational Group duly established under the laws of Saudi Arabia for the purpose of supporting, managing, and providing strategic direction to its Branches, Subsidiaries and Affiliates operating in MENA (Middle East and North Africa).
RHQs must have the presence of a physical office in the KSA, operating as a separate legal entity in the form of either an LLC (Limited Liability Company) or a foreign branch.
Requirements for RHQs in KSA
MNCs must comply with 2 main requirements starting from the date of obtaining the RHQ license if they wish to benefit from the numerous incentives. Below is a comprehensive overview of the requirements:
- Activity Requirements
The KSA requires that RHQs do not conduct any commercial activities that generate revenue, instead, RHQs must conduct all the required activities within 6 months, such as formulating and monitoring the regional strategy, reviewing financial performance, etc., in addition to at least 3 optional activities, such as auditing, accounting, and several more, within 1 year.
- Employee Requirements
It is mandatory that RHQs in the KSA have at least 15 full-time employees. All employees must be specialised in RHQ operations with the appropriate skills and expertise, and at least 3 of them must hold significant executive positions, such as Executive Director or Vice President.
- Additional Requirements
Prior to registration, the MNC must have either a branch or subsidiary internationally in 2 countries excluding the KSA, operate and engage in management, strategy, or support functions in MENA, then, ensure strict compliance to MISA’s (Ministry of Investment of Saudi Arabia) standards.
Key Benefits and Incentives
Without an RHQ license, MNCs are highly restricted in what business projects can be pursued with KSA’s government entities. Registering an RHQ in the KSA not only eliminates this drawback but provides benefits, tax and non-tax incentives for doing so. Below is a detailed outline of what RHQs can provide:
- Strategic Location
With the continuous establishment of customised initiatives like the GSCR (Global Supply Chain Resilience) initiative and SEZs (Special Economic Zones), RHQs can leverage the KSA’s large market and dynamic business landscape to facilitate unparalleled growth and innovation, strengthening their presence in the broader region.
- Tax Incentives
RHQs enjoy 30 years of 0% corporate tax and 0% withholding tax with eligible activities, additionally, the tax incentives can be renewed after the first term. Note that this only applies to the RHQ and not the extended branches, subsidiaries, and affiliates under management.
- Non-Tax Incentives
RHQs in the KSA also benefit from a 10-year Saudisation exemption, premium residency for 3 executives, a Waiver of Professional Accreditation, and end-to-end support via MIZA. Additionally, the RHQ will receive Visa Limit Exemption, Government Tendering and several more benefits that the business can enjoy.
Registration Process
The process of CR (Commercial Registration) is relatively simple and can be done conveniently online. Here is a step-by-step guide for registration:
- Issue RHQ License
Using the Invest Saudi website, submit the required documents, such as a copy of the current HQ’s CR or commercial license, the latest annual, audited, and consolidated financial statements, etc. This typically takes 2-3 working days and costs SAR 10,000.
- Reserve Trade Name
Using the MC (Ministry of Commerce) website, choose the name for the RHQ to be reserved for a period of 60 days. Typically, this takes 1 working day and has no service fees.
- Issue CR
If the RHQ is an LLC, use the SBC (Saudi Business Centre) website and submit a notarised Article of Association. Otherwise, use the MC website and submit a Board of Directors’ Resolution to Open a Branch. Next, both legal entities are required to submit additional documents, such as the RHQ license, a copy of the parent company’s CR, etc. This may take 5-10 working days and costs SAR 800-1,600.
- Activate Chamber of Commerce
Finally, after receiving the CR, use the MISA website to submit documents such as a copy of the RHQ license, the CR, and several more, to gain access to the multitude of services able to be leveraged to enhance the business. This typically takes 1-2 working days and costs SAR 2,000-10,000.
How CBD Can Assist
With our comprehensive suite of services, CBD enables you to leverage the RHQ’s Programme’s key benefits and guarantee success – from seamless relocation to strategic accounting, and so much more.
Contact us at: uae@cbdcorporateservices.com for tailored assistance and further information.