Saudi Arabia's Ministry of Investment has issued Rules — under Cabinet Resolution No. 338 — governing the licensing, supervision and incentives for the Regional Headquarters (RHQ) of multinational companies. A licensed RHQ is a Saudi-incorporated company or branch that runs a group's MENA strategy and support functions from inside the Kingdom, and in return it can access a 0% corporate income tax and 0% withholding tax regime for 30 years.
Key takeaways
- Cabinet Resolution No. 338 sets out the licensing criteria, permitted activities, substance thresholds, incentives and enforcement mechanism for RHQs of multinational companies in Saudi Arabia.
- A licensed RHQ receives 0% corporate income tax and 0% withholding tax on dividends, related-party payments and qualifying service payments to non-residents, for 30 years (renewable).
- To qualify, the applicant must be a genuine multinational — at least two branches or subsidiaries outside KSA and the country of incorporation — and the RHQ must be independent of the group's other Saudi entities.
- The RHQ must complete Saudi incorporation within 6 months of licensing and activate every mandatory function plus at least 3 optional functions, with 15 or more employees and 3 or more senior executives, within 12 months.
- Enforcement escalates from a warning to suspension to licence revocation within 90 working days; a revoked RHQ is treated as having no RHQ for government-contracting purposes.
What is a Saudi RHQ, and who is it for?
An RHQ is an onshore command centre. The Rules define it as a Saudi company or branch that provides strategic supervision, administrative guidance and internal support to a multinational group's branches and subsidiaries across the MENA region. Crucially, it must be the group's highest executive, administrative and strategic authority for the region — meaning the people who actually decide regional strategy have to sit in the Kingdom, not sign off from elsewhere.
Eligibility is deliberately narrow. The applicant has to be a real multinational, evidenced by at least two branches or subsidiaries located outside both Saudi Arabia and the country where the group is incorporated. The RHQ must be owned by the licence applicant and kept independent from the group's other Saudi entities, so an RHQ cannot simply be bolted onto an existing local trading company. This matters for international tax structuring: the RHQ perimeter has to be a distinct, governable entity.
The incentive: a 0% regime for 30 years
The headline benefit is a 30-year exemption (renewable) covering both corporate income tax and withholding tax. In practice the 0% withholding rate applies to three payment streams: dividends, payments to related parties, and payments to unrelated parties for services genuinely necessary for RHQ activity. That is a meaningful cash-flow advantage for a group routing regional dividends and intra-group service charges through the Kingdom.
The catch is that the relief is not unconditional: it follows RHQ activity, so functions, assets and risks have to line up with what the RHQ is licensed to do. A payment stream that cannot be tied to a licensed RHQ function is exposed, which is why intercompany service-fee design and transfer pricing documentation are load-bearing rather than optional.
Licensing and the 12-month activation clock
The timeline is fixed and unforgiving: a licensed group must complete Saudi incorporation of the RHQ within 6 months, then activate every mandatory function plus at least three optional ones — and meet the headcount and executive minimums — within 12 months of the licence. The Ministry reviews a complete application within 30 working days. The table below sets out the full sequence.
| Milestone | Deadline |
|---|---|
| Ministry reviews a complete application | Within 30 working days |
| Complete Saudi incorporation of the RHQ | Within 6 months of the licence |
| Activate all mandatory plus at least 3 optional activities; meet headcount and executive minimums | Within 12 months of the licence |
| First Ministry evaluation, then annual reviews | After 12 months |
The submission pack is substantial: the licence application form, the group's commercial registration, commercial registrations for two affiliates in two different countries outside KSA, audited financial statements of the head office for the last fiscal year, the chosen mandatory and optional activities, and both an RHQ work plan and an activation plan. An exceptions committee can grant deviations in special cases, but only with justification.
Substance: people, payroll and presence
Substance is where most groups underestimate the effort. The RHQ needs at least 15 employees in the first year and at least 3 senior executives who are the highest-ranking leaders for the region, with all regional executives in subsidiaries and branches reporting administratively to them. If several leaders share responsibility for the covered activities, all of them must be on the RHQ's Saudi payroll. Staff must be permanently dedicated to RHQ work, hold valid Saudi work authorisation and have non-temporary residence, with the Kingdom as their main home. Salaries must be paid in full into Saudi bank accounts through the RHQ's own Saudi account — a detail that quietly forces payroll, banking and immigration to be redesigned together. In practice, SBC finds it is substance, not the licence itself, that decides whether the 0% regime holds up, so this groundwork has to be finished well before the 12-month clock runs out.
The Rules also police the group's external face: websites, official documents and regional addresses must show that the RHQ is based in Saudi Arabia, and the group must register its trademarks in the Ministry's trademark register (which the Rules note is not an intellectual-property registration).
Losing an RHQ licence is not only a tax event. If the Ministry revokes a licence after an unresolved suspension, the group is treated as having no RHQ at all — which can lock it out of contracting with Saudi government entities.
Monitoring, violations and penalties
Supervision is continuous. The RHQ must provide a six-month update on its activation plan and annual reports thereafter, and the Ministry can inspect and demand supporting data at any time. Recognised violations include missing the incorporation deadline, failing to activate functions or reach minimum staffing on time, stopping approved activities without prior approval, performing RHQ activities from outside the Kingdom, acting beyond the RHQ's scope, or mishandling trademark entries. The penalty ladder runs from a warning, to suspension if the issue is not corrected within the specified period, to revocation if it remains unresolved 90 working days after suspension.
What multinationals should do now
The practical work is a governance project, not a filing. Confirm multinational status and the RHQ's ownership and independence; map the mandatory functions and select at least three optional ones, tied to real job descriptions and KPIs; plan for 15-plus headcount and three-plus executives with the immigration, payroll and banking to support them; and incorporate within the six-month window. In parallel, align websites and disclosures, and design a service-fee and cost-allocation architecture — with corporate tax and transfer pricing documentation — that can survive the Ministry's evaluations.
Frequently asked questions
What is a Regional Headquarters (RHQ) in Saudi Arabia?
An RHQ is a Saudi-licensed company or branch that acts as a multinational group's onshore hub for the MENA region, providing strategic supervision, administrative guidance and internal support to the group's branches and subsidiaries. It must be the group's highest regional authority and operate only from within the Kingdom.
What tax incentives does a Saudi RHQ receive?
A licensed RHQ benefits from 0% corporate income tax and 0% withholding tax on dividends, related-party payments and qualifying service payments to non-residents, for a period of 30 years that can be renewed. The relief only covers income and payments tied to genuine RHQ activity.
How many employees must a Saudi RHQ have?
At least 15 employees within the first year, including a minimum of three senior executives who are the highest-ranking regional leaders. All must be based in the Kingdom with local employment, Saudi payroll, valid work authorisation and non-temporary residence, with Saudi Arabia as their main place of residence.
What happens if a company breaches the RHQ rules?
The Ministry issues a warning first. If the breach is not corrected within the specified period the licence is suspended, and if it remains unresolved 90 working days after suspension the licence is revoked. A revoked group is then treated as having no RHQ for government-contracting purposes.
How SBC Tax Consulting can help
SBC supports multinationals across the full RHQ lifecycle: an eligibility and readiness diagnostic mapped to Cabinet Resolution No. 338, licensing and exception dossiers, operating-model and governance design, and the people, payroll and banking setup that the substance tests demand. Our tax and transfer pricing teams design the service-fee and cost-allocation architecture behind the 0% regime and build the evidence packs for annual evaluations. To assess your RHQ options, contact our advisors.
This publication is for general information only and does not constitute professional advice. Please consult your SBC advisor before acting on any matter covered here.