Saudi Arabia: Guidelines for regional headquarters eligible for tax incentives
Detailed explanations of regulatory provisions and practical examples illustrating the application and utilization of tax incentives
May 8, 2024
The Zakat, Tax, and Customs Authority (ZATCA) on 14 April 2024 released comprehensive guidelines for regional headquarters (RHQs) in Saudi Arabia that provide detailed explanations of regulatory provisions and practical examples illustrating the application and utilization of tax incentives available to RHQs.
An RHQ meeting the eligibility requirements may benefit from the following tax incentives for a period of 30 years (subject to renewal):
- Zero income tax on eligible income from eligible activities
- Zero withholding tax on certain payments made by RHQs to nonresidents, including dividends, payments to related persons, and payments to unrelated persons for services necessary for the activity of the RHQ
The guidelines address:
- Qualification requirements of an RHQ
- Mandatory and optional activities of an RHQ
- Taxes and tax incentives applicable to RHQ activities
- Registration mechanism
- Economic substance requirements
- Tax residency
- Permanent establishment (PE) of a nonresident affiliate
- Value added tax (VAT) implications
- Zakat
- Transfer pricing
- Real estate transaction tax (RETT)
- Tax procedures applicable to RHQs
- Penalties
For more information, contact a KPMG tax professional:
Philippe Stephanny | philippestephanny@kpmg.com