By VALUE SA
In a strategic move aligned with Vision 2030, Saudi Arabia has introduced a groundbreaking policy aimed at reshaping the corporate landscape of the Middle East. This policy invites multinational corporations (MNCs) to relocate their Regional Headquarters (RHQ) to Riyadh, the capital and largest city of the Kingdom. The implications of this policy are far-reaching, offering significant opportunities for businesses, investors, and the broader economy.
A Paradigm Shift in Saudi Policy
Riyadh, the Kingdom’s business capital, is rapidly emerging as the rising star of the GCC (Gulf Cooperation Council). With its strategic location, robust infrastructure, and commitment to fostering a business-friendly environment, Riyadh has become an attractive destination for global companies seeking to establish their RHQ.
In February 2021, the Saudi government announced a policy encouraging MNCs to move their RHQs to Saudi Arabia. This policy is a central pillar of Vision 2030, a comprehensive plan designed to attract foreign investment, diversify the economy, and position Riyadh as a central business hub in the region. The enforcement of this policy is set to commence in January 2024, marking a pivotal moment in Saudi Arabia’s economic transformation.
Benefits and Incentives for Relocating Your Headquarters to Riyadh
The Saudi government has rolled out a compelling package of benefits and incentives to attract MNCs to establish their RHQs in Riyadh. These incentives are designed to ease the transition and make the move financially attractive:
- Exclusive Bidding Advantage: Starting January 1, 2024, exclusive bidding opportunities with the Saudi government will be available only to companies with RHQs in the Kingdom, providing a significant competitive edge.
- 10-Year Saudization Exemption: Companies relocating their RHQs will enjoy a 10-year exemption from Saudization requirements, reducing operational complexities.
- Simplified Work Visas: RHQ employees will have easier access to work visas for non-Saudi nationals, with no limitations on the number of visas that can be issued.
- Ajeer Program: Dependents of RHQ employees can benefit from the Ajeer Program, which streamlines the process of hiring foreign workers and allows dependents to work in the Kingdom.
- Age Relaxation: The maximum age for residency of male dependents is extended to 25 years, improving the quality of life for expatriate families.
- Professional Accreditation Exemption: RHQ employees accredited in their home countries are exempt from professional accreditation requirements in Saudi Arabia.
- MISA Subscription Discounts: RHQs enjoy discounted subscription fees from the Ministry of Investment of Saudi Arabia (MISA) and access to its end-to-end services.
Requirements for Establishing an RHQ in Riyadh
To qualify for the RHQ program, companies must meet specific criteria:
- The company must have a presence in at least two countries outside Saudi Arabia.
- The RHQ must operate as a separate legal entity, focusing on strategic and management functions without engaging in direct commercial activities.
- The RHQ must employ at least 15 full-time employees, including 3 senior-level executives (Executive Director or Vice-President level), within one year of obtaining the RHQ license.
The RHQ serves as a special-purpose vehicle engaged in non-commercial activities, such as strategic direction, management functions, and support services for subsidiaries and affiliates.
Mandatory and Optional RHQ Activities
The activities of an RHQ are categorized into mandatory and optional functions:
- Mandatory Activities: These include providing strategic direction (e.g., formulating regional strategy, monitoring financial performance) and management functions (e.g., business planning, budgeting, and market analysis).
- Optional Activities: These encompass a wide range of services, including sales and marketing support, human resources management, financial management, logistics and supply chain management, research and development, and intellectual property rights management.
An RHQ must perform all mandatory activities and at least three optional activities to qualify for the program.
The Road Ahead
As the January 2024 deadline approaches, companies are poised to make pivotal decisions. This policy is not just a regulatory change; it is a catalyst for growth and innovation. Businesses that embrace this opportunity will play a significant role in shaping the economic landscape of Saudi Arabia and the wider region.
Eligibility Documents for Establishing an RHQ
To establish an RHQ in Saudi Arabia, companies must submit the following documents:
- A copy of the parent company’s commercial registration or commercial license, attested by the Saudi Embassy in the respective country.
- Copies of at least two commercial registrations or licenses from two different countries (excluding Saudi Arabia and the parent company’s home country), attested by the Saudi Embassy.
- The annual audited consolidated financial statements of the parent company for the last financial year, attested by the Saudi Embassy.
Closing Thoughts
Saudi Arabia’s RHQ policy represents a transformative shift in the region’s business environment. For businesses, investors, and industry observers, this is an essential development to watch closely. The opportunity to be part of Saudi Arabia’s growth story and the broader Vision 2030 initiative is here, and it’s an opportunity that should not be missed.
By relocating their RHQs to Riyadh, multinational corporations can unlock unparalleled benefits, contribute to the Kingdom’s economic diversification, and position themselves at the forefront of the Middle East’s evolving business landscape.
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