DUBAI — Saudi Arabia’s Minister of Investment Khalid Al-Falih said over the weekend that multinational companies that relocate their regional headquarters to Saudi Arabia in 2023 with the goal of securing government contracts are “likely” to receive a degree of tax relief.
Executives said the details are vague and they felt uncertain, as many believe there’s a possibility that they can be double taxed between Riyadh and other Gulf states, the report stated.
In an interview with the Financial Times, Falih said an announcement would soon be made to clarify the regulations but did not mention an exact date. He added that operations outside Saudi Arabia “will be taxed in those entities’ country of operations.”
“They will not be intermingled or mixed with the regional headquarters,” said Falih.
Falih and Saudi Arabia’s Justice Minister Walid Al-Samaani granted three foreign law firms licenses to practice in the country on the sidelines of the International Conference on Justice that began on Sunday in Riyadh, reported the country’s government news agency SPA.
These are the first licenses granted to foreign law firms in the kingdom after it made amendments to its Code of Law Practice impacting how licenses are regulated and approved by the Cabinet.
Ministers of Justice and Investment Hand Law Practice Licenses to Three Foreign Law Firmshttps://t.co/QjgfP1FyHE#SPAGOV pic.twitter.com/FX8zWuFvae— SPAENG (@Spa_Eng) March 5, 2023
Nearly 80 companies have been granted licenses to establish regional premises in Saudi Arabia by the end of 2022,” said Falih in a statement made at the World Economic Forum in Davos earlier this year, according to Saudi news agency Akhbaar24.
In February of 2021, Saudi Arabia dictated that it will no longer sign contracts with foreign companies that did not have their regional headquarters in the kingdom after 2023.
This decision is part of the country’s Vision 2030 strategy to bring in global companies and rise to one of the top 10 countries on the Global Competitive Index.
It’s also seen as a move to compel firms’ regional headquarters, predominantly based in Dubai and Abu Dhabi, to relocate if they want to do business with the kingdom.
Saudi Arabia has a current corporate income tax of 20%, according to the Saudi Embassy in Washington.
It is the largest economy in the Middle East and North Africa region and the world’s biggest oil producer. The kingdom seeks to diversify and reduce the economy’s dependence on oil extraction and exports, which account for 46% of the country’s gross domestic product, according to Trading Economics.