Saudi Arabia reveals criteria for 30-year tax exemption for multinational firms

The qualifying requirements for multinational companies to be eligible for a 30-year income tax exemption upon moving their regional headquarters to the Kingdom were recently published in the official Gazette of Saudi Arabia.

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Companies must abstain from giving misleading information, evading taxes, and committing other malpractices in order to be eligible for these incentives.

Launched in December 2023, the objective of this tax incentive initiative is to attract global enterprises to establish their regional hubs in Saudi Arabia. It offers corporate entities a tax rate of zero percent on income and withholding taxes for a duration of thirty years, commencing upon the acquisition of the regional headquarters licence.

The tax regulations are categorised according to economic activity and go into effect after being published in the official gazette. They comply with the Kingdom's current tax and zakat legislation.

A zero percent income tax rate on eligible income and a zero percent withholding tax on dividends and related payments to non-resident businesses are among the tax benefits that qualifying regional headquarters are entitled to, according to the regulations. These tax advantages are contingent on a few requirements, though. The regulations stress that regional headquarters must file tax returns, register with the appropriate authorities, and abide by all applicable tax laws and regulations.

Moreover, companies must maintain separate accounts for qualifying and non-qualifying activities and ensure compliance with actual economic requirements, including having a valid licence, sufficient assets, and a designated number of employees with relevant expertise.

Failure to meet these requirements may result in penalties, fines, or the suspension or cancellation of tax incentives. Additionally, regional headquarters are considered residents of Saudi Arabia for the purposes of international treaties, agreements, or other obligations, provided they meet the residency criteria outlined in the Income Tax Law.

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