Saudi Arabia approves contracting rules for firms not based in the kingdom

The Saudi cabinet has approved regulations for contracting between government agencies and companies that do not have regional headquarters in the kingdom, days before the start of 2024, the Saudi Press Agency reported on Tuesday.

The government announced that it would stop dealing with foreign companies whose regional headquarters are outside Saudi Arabia starting in 2024 as part of its efforts to become a regional business center and introduced a tax incentive package that exempts the regional headquarters of companies from income tax on entities for a period of 30 years.

According to a statement at Tuesday’s cabinet meeting, the council concluded by “approving the controls for government agencies contracting with companies that do not have regional headquarters in the Kingdom and related parties,” without elaborating further.

Saudi Arabia seeks to diversify its economy away from oil, will host Expo 2030, and aims to attract international companies to take their regional headquarters in the Kingdom, in competition with Dubai, which is a business center, and for that, build a financial center in the capital, Riyadh, which is expected to be the destination for companies.

Earlier this year, Saudi Arabia launched a program to attract regional headquarters to international companies to facilitate the opening procedures for those headquarters.

Saudi Arabia’s Investment Ministry announced this month the licensing of nine international Chinese companies to open their regional headquarters in the Kingdom, while Investment Minister Khalid Al-Falih said in a previous statement that the program attracted more than 200 companies.