Saudi Arabia has become one of the most important places for investors because they provide the benefits of remarkable tax incentives along with other business opportunities. The Kingdom’s efforts to achieve diversification through the Vision 2030 has led to abundant prospects for businesspersons and enterprises looking to set foot in the region. Maximizing tax benefits in Saudi Arabia greatly increases profitability while ensuring financial security in the long run.
There are great tax savings to be enjoyed through careful business structuring in conjunction with Saudi Arabia’s Regional Headquarters (RHQ) program and residency options like Premium Residency. On top of that, key tax obligations such as withhold tax have to be properly comprehended to ensure compliance while minimizing liabilities within legal frameworks.
In this blog, we discuss how best an investor can take advantage of the tax benefit opportunities while doing business in Saudi Arabia and make the Kingdom’s changing business environment work for them.
So ready to dive in? Let’s get started!
The Regional Headquarters (RHQ) Programme
One of the biggest tax benefit schemes for multinational companies is found in Saudi Arabia’s RHQ Programme.
This initiative aims to entice major global corporations to set up their regional headquarters in the Kingdom of Saudi Arabia by providing a tax incentive of a 30-year tax holiday. Such companies operating in Saudi Arabia are not subject to any corporate income tax and appreciation from using taxes on other payments that are granted within the approved firm operations.
Requirements
Companies are required to apply for an RHQ licence to meet the criteria, which contains specific key requirements, including sufficient assets and a set number of full-time employees in Saudi Arabia. The MENA businesses are particularly able to take advantage of this programme.
Who Should Consider It?
Multinational corporations seeking to penetrate the area can enjoy significant tax savings and the benefits of setting their regional headquarters in Saudi Arabia.
Stimulating Economic Growth in Developing Areas
The Saudi government is reluctant to foreign investment in poorly developed regions, hence offering a substantial tax incentive to help develop these areas.
These regions include Ha’il, Jazan, Najran, Al-Baha, Al-Jouf, and the Northern Territory. Companies that Implement projects in these localities are eligible for tax benefits for a period not exceeding 10 years.
Key Benefits:
- 50% deduction of training expenses incurred on providing training to employees from Saudi Arabia.
- 50% deduction from the tax base of salaries for employees who are Saudi nationals.
- A 15% deduction applies to shares not owned by Saudis if certain requirements are satisfied.
- Investors who spend more than SAR 1 million or hire at least five Saudis into managerial positions are entitled to greater deductions.
Who Should Consider It?
Companies that are interested in investing outside the populated areas will benefit greatly from these for the long run.
Custom Duty Exemptions
Saudi Arabia provides duty free importation other than the exemption of customs for raw materials and machines that are not produced locally. This makes setting up a business cheaper as it lowers the cost of imports.
Eligibility and Application
To take advantage of this exemption, businesses have to apply before importing and fulfill the other conditions. These exemptions are very helpful for sectors like manufacturing, which require specialized machinery.
Who Should Consider It?
Sectors of industry and manufacture or any company that uses imported equipment will benefit the most from these savings.
Financial Support and Loan Programmes
Saudi Arabia has developed so many financial aides for the support of a project that funding is not a concern anymore.
These programs target important sectors by providing lower interest rates, greater repayment periods of up to 25 years, and grace periods of 4-6 years. Initiatives under Vision 2030’s slogan ‘thrive in diversity’ were set up to enhance economic activity. Major sectors include renewable energy, Information Technology, and manufacturing.
Who Should Consider It?
Investors in industries who support Vision 2030’s initiatives and are willing to spend in the range of millions at the outset can take advantage of these loans with less stringent conditions.
Employment Support Programmes
Within Saudi Arabia, there are financial programs that support local employment. They pay companies to hire and create job opportunities as well as provide financial resources for training.
Key Programmes:
Tamheer – Offers financial support of SAR 3,000 alongside on the job training to Saudi Graduates.
Professional Certification Support – Employers can cover the certification expenses of their employees and reclaim those funds, allowing the Saudi workforce to be more skilled while providing tax relief to the employer.
Who Should Consider It?
Employers who are focusing on employing a greater number of Saudi citizens can help the country achieve its employment targets while minimizing their own salary expenses.
Tax Credits and Exemptions for Hiring and Training
To further incentivise the onboarding and upskilling of citizens, the government allows tax breaks on prescribed training and payroll expenditure.
Companies can receive a tax break of 50% for ten years on the payment of salaries to Saudi workers as well as expenses spent on training. This incentive is useful for firms whose focus is on building a productive local workforce but must also manage operational costs.
Who Is It Relevant To?
Companies that intend to hire and train a significant Saudi workforce stand to benefit from considerable cost savings over the long run.
Premium Residency Programme
For foreign investors wanting more freedom, the Kingdom of Saudi Arabia has launched the Premium Residency Programme which allows a person to live, work, buy property, and even establish a business in the country without the need of a local sponsor.
The program comes in two variants:
A renewable residency for one year for SAR 100,000
Permanent residency for SAR 800,000
Key Benefits:
Ability to employ staff.
Possession of real estate and commercial entities.
Most rights enjoyed by Saudi citizens.
Who Is It Relevant To?
This benefits people with high net worth looking for real estate investment and long-term stays in Saudi Arabia.
Double Taxation Avoidance Agreements (DTAs)
Saudi Arabia has established Double Taxation Avoidance Agreements (DTAs) with various countries to protect investors from being taxed on the same revenue earned in different counties.
These agreements are beneficial in further lowering a foreign business’s tax burden on income received from investments made in Saudi Arabia.
Who Should Think about It?
International investors as well as firms in DTA-partnered nations can take advantage of the investments by improving their tax position in Saudi Arabia.
Analytix Can Assist You In Maximizing Tax Advantages In Saudi Arabia
Taxes can be daunting, but the right knowledge can empower investors to take advantage of available opportunities. Analytix is focused on helping clients invest in Saudi Arabia by maximizing tax benefits. Whether you are setting up a new business or applying for premium residency, relocating to Saudi Arabia or even establishing a regional headquarters, we ensure you have every step covered in utilizing Saudi tax reliefs while being fully compliant with the legislation. At Analytix, we assist our clients in formulating a tax strategy that helps minimize liabilities and undue expenses with effective strategic tax planning.
Our bespoke consulting services on business setup in Saudi Arabia include choosing the most appropriate legal structure and facilitating maximum tax benefits. With our expertise in Saudi Arabia’s tax policies which include corporate tax waivers and Vision 2030 investment incentives, we make sure your investment pays off in the long run. Years of expertise in the field and presence of industry experts help us deliver efficient business consultancy services to maximise your tax benefits in the Kingdom of Saudi Arabia.
Gaining access to our services means obtaining expert counsel from Analytix that enables making strategic moves out of tax obligations. Our focus is to assist stakeholders in reducing expenses, increasing profits and laying out a concrete financial plan in the competitive economy of Saudi Arabia. So don’t waste time, ring us today and get to know the secret tips from the industry experts to maximise the tax benefits in Saudi Arabia.
Conclusion
Developing an effective approach to minimize tax liability in Saudi Arabia can pose a challenge. However, with the country’s top notch investment strategy, doing business becomes easier in the KSA. But always make sure that you as the investor make use of the available exemptions, anti withholding taxes and other business deductions to take advantage of Saudi Arabia’s evolving economic policies. Provided the right approach to investment and the proper advice, taking benefit from the tax policies in the Kingdom becomes effortless for both foreign and local investors.
Hope you are clear with how to maximize tax benefits in Saudi Arabia. We have tried our best to present it as comprehensively as possible. But, if you really feel that the blog missed to discuss something important, feel free to bring that to our attention. We openly welcome your valuable feedback and suggestions and will surely include it in our blog.
