Saudi Arabia: Further Details Released on Regional Headquarters Program

Details on the new guidance are as follows:

• Targeted companies. The new initiative allows companies to obtain a Regional Headquarters’ business license if they are conducting business in more than one jurisdiction and seek to establish their presence in Saudi Arabia for the purpose of supporting, managing, and providing direction to their branches, subsidiaries and affiliates operating in the Middle East and North Africa region. These countries include: Algeria, Bahrain, Egypt, Iraq, Jordan, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Saudi Arabia, Syria, Tunisia, United Arab Emirates and Yemen.
• Duration of business license. The business license will be issued for a period ranging from one to five years, renewable, based on the applicant company’s choice.
• Conditions for issuance of business license. Businesses must meet the following criteria to obtain a Regional Headquarters’ business license:
  • The investor must have a presence, either through subsidiaries or branches, in a minimum of two different countries other than Saudi Arabia and the country of incorporation of its headquarters;
  • The Regional Headquarters must operate as a registered foreign company in Saudi Arabia and must perform strategic direction and management functions within six months of receiving the license (this includes formulating and monitoring the regional strategy, supporting mergers and acquisitions and reviewing financial performance); and
  • The Regional Headquarters must not conduct any commercial activities but can perform select other activities including sales and marketing; training; and advisory services.

Additional details of the permit can be found on the Saudi government’s website.

 

In January 2021, Saudi Arabia announced that international businesses without regional headquarters in Saudi Arabia may not be able to contract with agencies, institutions and funds own by the Saudi government, effective January 1, 2024. However, according to the MISA, this new requirement will not affect new or existing investors’ ability to enter the Saudi market or to continue their business with the private sector.

The law is expected to incentivize companies to create regional headquarters in Saudi Arabia ahead of the 2024 law going into effect. Companies who obtain the Regional Headquarters’ Business License may benefit from exemptions from select Saudization requirements and may obtain government fee waivers, although no specific details or mechanisms have been published yet.

Further details on the Regional Headquarters’ Business License are expected to be released, including incentives for obtaining the license.