Saudi Arabia's Regional Headquarters programme: the 30-year tax deal and the contract rule

Since 1 January 2024, Saudi Arabia has quietly redrawn the rules of corporate presence in the Gulf. Any multinational that wants to bid on central-government contracts must now hold a regional headquarters licence in the Kingdom, and the incentive for doing so is hard to ignore: a 30-year package of zero per cent corporate income tax and zero per cent withholding tax on eligible RHQ income. By early 2026, roughly 700 multinationals had already established their Saudi regional headquarters, turning what began as a policy announcement into a competitive reality. For groups still weighing their options, the window is not closing, but the cost of delay is rising. Competitors are locking in government relationships, building local teams, and securing the tax benefits while latecomers are still circulating internal memos. This guide breaks down the programme's mechanics, the contract rule, the substance requirements, and whether a Saudi RHQ makes sense for your group versus a UAE alternative.

What the RHQ programme is, and why it exists

The RHQ programme is a joint initiative of the Ministry of Investment of Saudi Arabia (MISA), the Ministry of Finance, and the Zakat, Tax and Customs Authority (ZATCA). Its purpose is straightforward: pull genuine decision-making into the Kingdom rather than allowing multinationals to service the Saudi market from Dubai, Bahrain, or further afield.

Under the programme, a qualifying company establishes a licensed regional headquarters in Saudi Arabia that provides strategic oversight and management services to the group's entities across the Middle East, Africa, or broader regions. The RHQ is not a sales office, a branch, or a shell. It is a real corporate hub with real people making real decisions.

The policy sits squarely within Vision 2030's goal of transforming Saudi Arabia into a regional business centre. The 700-plus companies that have already moved are a mix of Fortune 500 firms, large Asian conglomerates, and mid-cap European groups, all drawn by the same combination of tax relief and government-contract access.

The government-contract rule that forces the decision

Since 1 January 2024, Saudi central-government agencies generally will not award contracts to companies that lack an RHQ licence. Procurement requests run through the Etimad platform, and the Local Content and Government Procurement Authority (LCGPA) enforces the rule.

This is not a soft preference. If your group bids on a government project and you do not hold an RHQ licence, your bid is typically excluded at the eligibility stage. For sectors like defence, infrastructure, healthcare, and technology, where government spending dominates the pipeline, the commercial impact is immediate and measurable.

There are exemptions (covered below), but the direction is clear: Saudi Arabia wants headquarters presence, not just project execution. Groups that rely on government revenue in the Kingdom have already moved or are in the process. Those that have not risk losing pipeline to competitors who did.

The 30-year tax incentive: 0 per cent corporate and withholding tax

The headline incentive is a 30-year tax package, starting from the date of the RHQ licence:

• Zero per cent corporate income tax on eligible RHQ income
• Zero per cent withholding tax on certain payments made by the RHQ (dividends, management fees, royalties, and similar outflows to related entities)

The 30-year clock starts on licence issuance, not on the date the company begins operations. That distinction matters for groups that take time to build out their teams and office space.

A critical point: this relief applies only to qualifying headquarters activities. If your group also operates a separate business in Saudi Arabia, say a manufacturing plant or a retail operation, that business is taxed under normal Saudi corporate tax rules. The RHQ incentive is not a blanket exemption. It covers the headquartering function, not the entire group's Saudi income. ZATCA audits this distinction, and groups that blur the line between RHQ income and operating income will face reassessment.

What counts as regional headquarters activity

ZATCA and MISA define eligible RHQ activities around genuine strategic and managerial oversight. The kinds of functions that qualify include:

• Strategic planning and direction for regional subsidiaries
• Treasury and financial management across the group's regional entities
• Marketing and brand management coordination
• Human resources policy and talent management for the region
• Technology and digital strategy oversight
• Supply chain and procurement coordination
• Legal, compliance, and government-affairs management

The common thread is control and coordination. If the Saudi RHQ is genuinely directing the group's regional operations, the activity qualifies. If it is merely a post-box that rubber-stamps decisions made in London or Singapore, it does not.

ZATCA reviews substance annually, and the distinction between genuine headquarters activity and a rebranded back office is one they understand well.

The substance you must have

Saudi Arabia is serious about substance, and the requirements reflect that. Within the first year of obtaining an RHQ licence, a company must broadly meet the following conditions:

• A minimum of 15 full-time employees based in Saudi Arabia
• At least 3 C-suite executives (CEO, CFO, COO, or equivalent) physically present and working from the RHQ
• A genuine office: not a virtual address or a co-working hot desk
• Documented decision-making that shows the RHQ is directing regional operations, not simply reporting to a head office elsewhere

An annual compliance report is filed with the relevant authorities, and ZATCA audits these conditions. Groups that treat the substance requirements as a box-ticking exercise tend to run into problems at the audit stage. The authorities are looking for economic reality: board minutes held in Riyadh, regional budgets approved from the Saudi office, hiring decisions made locally.

Cosmos regularly advises groups on structuring their RHQ to meet these substance thresholds from day one, coordinating with licensed Saudi partners to ensure the employment contracts, office leases, and governance documentation are audit-ready before the first compliance report is due.

Exemptions and the SAR 1 million threshold

The government-contract rule has teeth, but it also has defined exemptions. Not every procurement requires an RHQ licence:

• Procurement estimated under SAR 1 million is generally exempt
• Sole technically-compliant bids: if only one bidder meets the technical requirements, the RHQ rule may be waived
• Bids that are at least 25 per cent cheaper than the next-best compliant bid can also qualify for an exemption

These exemptions are narrower than they appear. The SAR 1 million threshold is low for most government projects of any scale, and relying on the "sole compliant bid" or "25 per cent cheaper" exemptions is not a strategy: it is a gamble. Groups that plan to do sustained business with Saudi government entities should treat the RHQ licence as a baseline requirement, not something to be exempted from.

The LCGPA administers these exemptions through the Etimad platform, and the process is transparent. But the direction of policy is toward tightening, not loosening, the requirements.

Is an RHQ right for you, or is a UAE base better?

This is the question most groups ask first, and the honest answer depends on where your revenue comes from.

If your group's Middle East revenue is heavily weighted toward Saudi government contracts, or if Saudi Arabia is your largest regional market, the RHQ programme is close to mandatory. The combination of contract access and a 30-year tax holiday on headquarters income makes the business case clear.

If your group primarily serves private-sector clients across the GCC, with limited Saudi government exposure, a UAE base may still make sense. The UAE offers its own advantages: no personal income tax (as in Saudi Arabia), strong infrastructure, and a well-established ecosystem for regional headquarters. But the UAE does not give you access to Saudi government procurement, and it does not offer a comparable 30-year corporate tax holiday on RHQ income.

Many groups are running both: a UAE hub for commercial operations and a Saudi RHQ for government-facing strategy and regional oversight. This dual structure works, but it requires careful transfer pricing documentation and genuine substance in both locations. Cosmos helps groups model these scenarios, comparing the total cost of establishment, ongoing compliance burden, and revenue impact of each structure before committing.

How Cosmos helps

Setting up a Saudi RHQ involves coordination across MISA, ZATCA, the LCGPA, and multiple Saudi regulatory bodies. The process is not impossibly complex, but it is detail-heavy, and mistakes at the application stage create delays that compound.

Cosmos advises on and coordinates the full RHQ setup through licensed Saudi partners. That includes structuring the entity, preparing the substance documentation, coordinating employee visa and Iqama processes, and ensuring the governance framework passes ZATCA's annual review. Cosmos is not a registry or a law firm: it is an advisory and coordination layer that ensures each specialist (legal, immigration, tax) is working from the same plan.

For groups running a dual UAE-Saudi structure, Cosmos also coordinates the intercompany agreements and transfer pricing documentation that link the two entities. Generic templates do not hold up under ZATCA scrutiny. Bespoke, professionally drafted agreements are essential.

Frequently asked questions

Can I keep my UAE entity and still set up an RHQ in Saudi?

Yes. Many multinationals maintain both. The key is ensuring each entity has genuine substance and that intercompany arrangements are documented at arm's length.

How long does the RHQ licence take to obtain?

Timelines vary, but most groups should plan for three to six months from initial application to licence issuance, depending on the completeness of documentation and the responsiveness of internal approvals.

Does the 30-year tax incentive apply to all my Saudi income?

No. It applies only to eligible headquarters activities. A separate operating business in Saudi, such as a factory or retail chain, is taxed under normal rules.

What happens if I fail the substance test?

ZATCA can revoke the tax incentive, and the LCGPA can restrict your access to government procurement. The consequences are real, which is why getting substance right from the outset matters more than speed of setup.

Is the programme still accepting applications in 2026?

Yes. The programme remains open, and MISA continues to process new RHQ licence applications.

The Saudi RHQ programme is no longer a future policy direction: it is an established programme with 700-plus participants, active ZATCA enforcement, and a procurement rule that directly affects revenue. Groups with meaningful Saudi exposure should treat the decision as urgent, not aspirational. The 30-year tax package is generous, but the real driver for most companies is contract access. If you are weighing the move, Cosmos can model the structure, coordinate the setup, and ensure your substance documentation is audit-ready from day one. Reach out to start the conversation.

Disclaimer: this article reflects the position as understood in 2026. Conditions, thresholds, and tax rates are subject to change. Confirm all details with a qualified Saudi tax and legal adviser before making decisions.

This is general information, not tax, legal or investment advice. Saudi investment, tax and Zakat rules change; confirm the current position with a qualified Saudi adviser before acting.