With the Government Tendering and Procurement regulations now fully operative, the Regional Headquarters (RHQ) program in the Kingdom of Saudi Arabia has evolved beyond a mere administrative formality or a nominal "postal address." It now necessitates a tangible shift of the strategic center of gravity for MENA operations to Riyadh. For Multinational Corporations (MNCs), the legal and fiscal implications of this transition are profound and require meticulous attention to the following statutory pillars: • Contracting Exclusivity: Pursuant to the new regulations, Saudi government agencies are statutorily precluded from entering into contracts with foreign entities that do not maintain a licensed RHQ in the Kingdom. Exceptions to this rule are strictly defined and narrowly interpreted, rendering the RHQ license a prerequisite for market access. • Fiscal Incentives & Tax Relief: The program offers a substantial fiscal advantage, granting a 30-year tax relief period. This includes a zero-percent rate on Corporate Income Tax (CIT) and Withholding Tax (WHT) specifically for "Qualifying Activities." This structure provides a significant competitive edge in long-term cash flow management and fiscal planning. • Economic Substance Requirements: Obtaining the license is contingent upon the "Substance over Form" doctrine. The RHQ must exercise actual strategic direction and management functions for the MENA region from within Riyadh. A shell entity or nominal presence is legally insufficient; the center of management and control must physically reside within the jurisdiction. ? Legal Perspective: Non-compliance entails risks far exceeding the disqualification from government tenders. Operating within the Kingdom without the appropriate legal structure or failing to meet substance requirements may trigger Permanent Establishment (PE) risks, leading to retrospective tax audits and penalties by the Zakat, Tax and Customs Authority (ZATCA). We invite you to consult with our legal experts to review your current standing and strategic alignment. ? Contact us via mobile: 01000230606 or our website: https://easternnco.com/contact_us to schedule a confidential consultation.

With the Government Tendering and Procurement regulations now fully operative, the Regional Headquarters (RHQ) program in the Kingdom of Saudi Arabia has evolved beyond a mere administrative formality or a nominal "postal address." It now necessitates a tangible shift of the strategic center of gravity for MENA operations to Riyadh.
For Multinational Corporations (MNCs), the legal and fiscal implications of this transition are profound and require meticulous attention to the following statutory pillars:
• Contracting Exclusivity: Pursuant to the new regulations, Saudi government agencies are statutorily precluded from entering into contracts with foreign entities that do not maintain a licensed RHQ in the Kingdom. Exceptions to this rule are strictly defined and narrowly interpreted, rendering the RHQ license a prerequisite for market access.
• Fiscal Incentives & Tax Relief: The program offers a substantial fiscal advantage, granting a 30-year tax relief period. This includes a zero-percent rate on Corporate Income Tax (CIT) and Withholding Tax (WHT) specifically for "Qualifying Activities." This structure provides a significant competitive edge in long-term cash flow management and fiscal planning.
• Economic Substance Requirements: Obtaining the license is contingent upon the "Substance over Form" doctrine. The RHQ must exercise actual strategic direction and management functions for the MENA region from within Riyadh. A shell entity or nominal presence is legally insufficient; the center of management and control must physically reside within the jurisdiction.
? Legal Perspective: Non-compliance entails risks far exceeding the disqualification from government tenders. Operating within the Kingdom without the appropriate legal structure or failing to meet substance requirements may trigger Permanent Establishment (PE) risks, leading to retrospective tax audits and penalties by the Zakat, Tax and Customs Authority (ZATCA).
We invite you to consult with our legal experts to review your current standing and strategic alignment.
? Contact us via mobile: 01000230606 or our website: https://easternnco.com/contact_us to schedule a confidential consultation.