Some 127 international companies have relocated their regional headquarters to Saudi Arabia over the first quarter of 2024, according to a new report, an increase of 477% from the previous year as the kingdom looks to lure businesses to set up there as it diversifies its economy away from oil.
The Saudi Gazette reported the news Monday.
The kingdom introduced tax incentives in December 2023 for multinationals to move their regional headquarters to the kingdom, including a 30-year exemption on corporate income tax and withholding tax related to headquarters activities. The companies will also benefit from eased Saudization requirements and work permit provisions to the spouses of executives who work in the Saudi regional headquarters. The deadline to take advantage of the program passed on Jan 1.
Under Crown Prince Mohammed bin Salman’s Vision 2030 agenda to diversify the kingdom’s economy away from a reliance on oil by heavily investing in other sectors such as entertainment, green energy, mining and tourism, the Gulf country has been trying to ease the foreign business environment and woo international investors. Riyadh is on a collision course with Dubai to be the Middle East's main financial center. Although Dubai has a more developed financial landscape for foreign businesses and two free zones for financial services with independent regulators, Riyadh is doing its best to catch up with its Emirati neighbor.
Other new rules that Saudi Arabia implemented this year require companies to have a regional base in Saudi Arabia with at least 15 employees, including executives overseeing other countries, or risk losing market share to the kingdom’s state entities.
Back in 2021, the Saudi government said it would stop working with international companies without a regional headquarters in the Gulf country by 2024.
Saudi Investment Minister Khalid Al-Falih said in May that over 400 international companies had obtained regional HQ licenses for the kingdom.
Also in May, Bloomberg reported that Goldman Sachs had become the first Wall Street bank to open a regional headquarters in Saudi Arabia.
The news comes weeks after the world’s largest asset manager, BlackRock, established a Riyadh-based investment platform with help of a $5 billion anchor investment from Saudi Arabia’s Public Investment Fund, the kingdom’s deep-pocketed sovereign wealth fund that has around $900 billion in assets.
