Since 1 January 2024, Saudi government contracting rules have restricted certain government contracts with foreign companies lacking a licensed regional headquarters in Saudi Arabia, subject to the scope of the rules and applicable exceptions.
That single rule reframes the RHQ question. It is no longer only about the 30-year tax package, generous as that is. For any multinational that sells to, or wants to sell to, the Saudi public sector and its giga-projects, an RHQ has become a condition of access. This guide sets out the rules, the benefits, the eligibility criteria, and the obligations.
Quick Answer: What Is the RHQ Programme?
The Regional Headquarters (RHQ) programme is a Saudi initiative, run by the Ministry of Investment (MISA) and the Royal Commission for Riyadh City, that encourages multinationals to base their regional headquarters in the Kingdom. Qualifying companies receive a 30-year package of incentives, including 0 percent corporate income tax and 0 percent withholding tax on eligible RHQ activities, plus Saudization and visa concessions.
Since January 2024, RHQ status has become relevant to eligibility for certain Saudi government contracts, subject to the relevant rules and exceptions. Published counts of licensed RHQs should be checked against a dated official source before publication.
The Government Contract Rule: Why RHQ Became Non-Optional
This is the rule that changed the calculation for multinationals.
From 1 January 2024, applicable Saudi government contracting rules restrict certain government entities from contracting with foreign companies without a licensed RHQ, subject to prescribed exceptions and procurement conditions. A licensed RHQ does not automatically qualify a company for every government or PIF tender.
For companies in that position, the RHQ decision is no longer a tax optimisation exercise. It is a market access requirement. The incentives are the upside; the contract eligibility is the necessity.
The 30-Year Incentive Package
RHQs that meet MISA’s qualification criteria and satisfy ZATCA’s Economic Substance Requirements are entitled to a 30-year renewable incentive package. The headline benefits are:
- 0 percent corporate income tax on eligible RHQ activities
- 0 percent withholding tax on eligible RHQ activities
The RHQ income-tax incentive is not a blanket exemption from VAT, Zakat or Real Estate Transaction Tax. Whether any such tax applies depends on the entity, transaction and relevant statutory conditions.
The Other Benefits
Beyond the tax package, RHQ status carries operational advantages that matter as much day to day.
- A 10-year exemption from Saudization quotas, which removes the Nitaqat pressure that other employers manage continuously
- Facilitated work visa arrangements for eligible RHQ personnel, subject to the relevant immigration rules, procedures and approvals.
- Premium Residency-related incentives may be available for qualifying RHQ executives, subject to the current program, eligibility and fee rules; RHQ licensing alone does not guarantee automatic issuance.
- Potential participation in relevant government and PIF-linked opportunities, subject to each procuring entity’s eligibility, prequalification and tender rules; no automatic direct tender access is guaranteed.
Saudization concessions and facilitated visa arrangements can be valuable, but employers must check the scope, eligibility and administrative requirements of each incentive.
Eligibility Criteria
Not every foreign company qualifies. To obtain an RHQ license from MISA, the applicant must be:
- An international company with its main headquarters and at least two branches or subsidiaries in countries other than Saudi Arabia. The RHQ is meant to be a genuine regional hub, not a single-market entity.
Once licensed, the RHQ must meet substance requirements:
- A physical office in Saudi Arabia
- At least 15 full-time staff within the first year, including senior executives
- Satisfaction of ZATCA’s Economic Substance Requirements to retain the tax benefits
The substance conditions are not a formality. The tax package is conditional on meeting them, and ZATCA assesses compliance. An RHQ that exists on paper but does not meet the substance test risks losing the incentives it was set up to capture.
What an RHQ Must Actually Do
The RHQ is intended to house genuine regional functions, such as strategic direction, coordination of regional operations, and management support for the group’s presence across the region. The eligible activities that attract the 0 percent rates are tied to this regional headquarters role.
This is why the structure matters. Mixing eligible RHQ activities with other commercial or revenue-generating activities in the same entity can complicate or dilute the tax benefit. Getting the structure right from the start is far easier than restructuring later, particularly given the substance requirements ZATCA applies.
Is an RHQ Right for Your Company?
An RHQ is worth serious evaluation if:
- in which case RHQ licensing may affect eligibility, subject to the contracting rules and exceptions
- You are a multinational with genuine regional operations that can meet the two-country and substance requirements
- Saudization concessions and facilitated visa arrangements can be valuable, but employers must check the scope, eligibility and administrative requirements of each incentive.
- You want to evaluate eligibility for public-sector or giga-project opportunities, subject to the relevant procurement rules
It is less relevant if you are a single-market entrant with no regional footprint, or a small operation that cannot meet the 15-employee substance requirement. For those companies, a standard LLC is usually the right structure, and we cover that comparison in a separate guide on branch, LLC, and subsidiary structures.
How ACT Supports RHQ Setup
At ACT Corporate Services, we manage the full company establishment lifecycle in Saudi Arabia, including RHQ licensing, through documented steps and clear authority coordination.
For RHQ specifically, we confirm your eligibility against the two-country and headquarters criteria, structure the entity so eligible RHQ activities are positioned to capture the incentive package, manage the MISA RHQ license and the Commercial Registration, and set up the physical office and workforce mobilisation to meet the 15-employee substance requirement within the first year. We also coordinate the ongoing obligations, including the ZATCA Economic Substance Requirements, so the tax benefits are protected rather than put at risk.
Frequently Asked Questions
Q. What is the Saudi RHQ programme?
It is a MISA initiative encouraging multinationals to base their regional headquarters in Saudi Arabia. Qualifying companies receive a 30-year package including 0 percent corporate income tax and 0 percent withholding tax on eligible RHQ activities, plus Saudization and visa concessions.
Q. Is an RHQ mandatory in Saudi Arabia?
Certain Saudi government contracts are subject to RHQ-related restrictions, with defined exceptions. An RHQ is not an absolute requirement for every government or PIF contract.
Q. What are the RHQ tax benefits?
The RHQ income-tax incentive is not a blanket exemption from VAT, Zakat or Real Estate Transaction Tax. Whether any such tax applies depends on the entity, transaction and relevant statutory conditions.
Q. What are the eligibility requirements for an RHQ?
The applicant must be an international company with its main headquarters and at least two branches or subsidiaries outside Saudi Arabia. Once licensed, the RHQ needs a physical office, at least 15 full-time staff within the first year, and must satisfy ZATCA’s Economic Substance Requirements.
Q. Does an RHQ get a Saudization exemption?
Facilitated work visa arrangements for eligible RHQ personnel, subject to the relevant immigration rules, procedures and approvals.
Q. How many companies have RHQ status?
The number of licensed RHQs changes over time; confirm the latest figure against a dated official government publication before quoting it.
Speak to ACT About Establishing an RHQ
If your access to Saudi government business now depends on holding an RHQ, the structure you choose and the substance you build determine whether you capture the benefits or merely the obligations.
Book a consultation with ACT Corporate Services and we will confirm your eligibility, structure the entity correctly, and manage the RHQ license through to a compliant, operational headquarters.
