The Regional Headquarters (RHQ) Mandate
As of January 1, 2024, Saudi government agencies are prohibited from contracting with foreign firms that do not have a regional headquarters in the Kingdom. Here is the operational reality.
The 30-Year Tax Incentive
To sweeten the mandate, MISA and ZATCA introduced a 30-year tax relief package for qualifying RHQs. This includes a 0% rate on corporate income tax and withholding tax on dividends paid to non-resident entities.
Key Exemption Criteria:
- Must have a minimum of 15 full-time employees within 1 year.
- Must hold at least 3 executive-level roles (e.g., CEO, CFO, VP).
- Revenues must be derived solely from eligible RHQ activities (strategic direction, management functions). Operational revenues remain subject to standard 20% CIT.
Enforcement Reality
While over 400 licenses have been issued, structural compliance is lagging. Many firms are establishing "letterbox" RHQs to maintain government contracts, prompting MISA to increase audits on the substance requirements (actual physical presence and management control residing in Riyadh).
Next Step: Calculate Impact
Use our tax estimator to model the potential savings of restructuring your GCC operations to meet RHQ criteria.
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