Thirty years at zero: what the Regional Headquarters programme actually gives you

The Regional Headquarters programme, run jointly by the Ministry of Investment and the Royal Commission for Riyadh City, has licensed more than two hundred multinationals since it launched in 2021. In 2023 it acquired the incentive that made everyone look again: a thirty-year tax relief package.

What the package contains

For approved RHQ activities:

• 0% corporate income tax
• 0% withholding tax

For thirty years, counted from the day the RHQ licence is obtained. Alongside it: relaxed Saudization requirements, and work permits for the spouses of RHQ executives.

Two words in that list carry the weight — approved and activities. The relief attaches to the activities the RHQ licence covers, not to everything the group does in the Kingdom. An RHQ that also trades locally does not thereby make its trading income tax-free. Getting that boundary right, in the structure and in the bookkeeping, is the whole exercise.

Who it is actually for

The programme is aimed at multinational groups placing a genuine regional management function in Riyadh — strategic direction, regional oversight, the people who make decisions for a group of countries. It is not a mailbox and it is not a way to relabel an existing trading entity.

Related to this, government contracting rules have pushed in the same direction: entities without a regional headquarters in the Kingdom face restrictions on contracting with government bodies. For groups whose Saudi revenue depends on public-sector work, the RHQ question has moved from is the tax relief worth it to can we contract without one.

Where it goes wrong in practice

Three things, in our experience:

The activity boundary is not maintained in the books. The relief is only as clean as your ability to demonstrate which income arose from approved RHQ activities. If the RHQ and the operating company share a general ledger, a bank account and a payroll, you will not be able to show it when asked. The separation has to exist in the accounting from day one, not be reconstructed at year end.

Substance is assumed rather than built. A headquarters that manages a region has people in it who do that job. Thin substance is the risk that outlives the incentive, because it is judged years later against what you actually did.

Transfer pricing is treated as an afterthought. An RHQ charges the group for services. Those charges have to be at arm's length and documented. A zero rate on a charge that cannot be defended is not a saving.

The honest assessment

If your group has real regional management to place, the RHQ programme is among the most generous incentives available anywhere, and thirty years is long enough to plan a business around. If you are a single-country operation looking for a tax outcome, it is the wrong instrument and the substance requirements will find you.

We set up RHQ entities, and we also tell groups when they do not qualify — usually before they have spent anything finding out. If you want that assessment, tell us what functions you would place in Riyadh, how many people, and what the entity would charge the group for. That is enough for a straight answer.

Programme conditions and incentives are set by MISA and the Royal Commission for Riyadh City and can change. Confirm current requirements before making a structural decision.