Multinationals that relocate their regional headquarters to Saudi Arabia this year with the aim of securing lucrative government contracts would be “likely” to receive tax relief, said the kingdom’s investment minister, as executives fear they could be taxed in more than one jurisdiction.
Many executives said they were still uncertain about the details of the tax regime two years after they were informed of the relocation deadline. Several said a key concern was that, in the absence of a taxation accord between Riyadh and other Gulf states that could fall under the regional HQ’s oversight, subsidiaries’ profits could be taxed twice.
“So the moment you designate that entity as your regional head office, all of your regional profits could then be taxable in Saudi Arabia,” said one executive. “That has caused fear and panic across the patch.”
Investment minister Khalid al-Falih said an announcement would be made soon to clarify the regulations. Saudi Arabia, the world’s top oil exporter and the Middle East’s largest economy, announced its regional headquarters programme in 2021, sending shockwaves through the United Arab Emirates, where most regional corporate head offices are based.
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