How to Start a Regional Head Quarter (RHQ) in Saudi Arabia: A Basic Guide
Are you considering doing business in Saudi Arabia? Understanding the rules for setting up a 'Regional Headquarters' (RHQ) is crucial. As the fastest-growing G20 country, Saudi Arabia has become one of the world's most attractive markets. To capitalise on this growth, the Royal Commission for Riyadh City (RCRC) and the Ministry of Investment (MISA) have launched the Regional Headquarters (RHQ) programme. This aims to establish Saudi Arabia as the leading hub for multinational companies in the MENA region. This blog will help you understand the RHQ Programme in detail.
Saudi Arabia Regional Headquarters
Regional Headquarters (RHQ) refers to the primary office of a multinational corporation (MNC) that serves as its administrative centre in a particular region of the world. The RHQ is responsible for overseeing, managing, and directing the company's operations within that designated region. In Saudi Arabia, the government, starting from 1 January 2024, will stop working with any foreign company that has an RHQ in MENA outside the kingdom. MENA countries include all GCC countries (Saudi Arabia, United Arab Emirates, Kuwait, Bahrain, Oman, and Qatar), plus Yemen, Iraq, Jordan, Palestine, Lebanon, Syria, Egypt, Libya, Tunisia, Algeria, Mauritania, and Morocco.
Timeline for the Saudi Arabia Regional Headquarters Programme
In February 2021, the initial announcement came from the Saudi Government, declaring their intention to limit their business dealings with foreign companies lacking a Regional Headquarters (RHQ) within the Kingdom of Saudi Arabia.
In February 2022, A significant step was taken by the Saudi Ministry of Investment of Saudi Arabia (MISA). They introduced new guidance on the Invest Saudi portal. The primary objective of this move was to provide incentives to corporations considering the establishment of an RHQ in the Kingdom.
In December 2022, the Saudi Ministry of Finance introduced a new set of stringent controls. Effective from 1 January 2024, these controls curtail the capability of Saudi governmental agencies to enter into business arrangements with MNCs unless these companies have an RHQ in Saudi Arabia.
In March 2023, addressing the concerns of several multinational corporations contemplating the establishment of their RHQ in KSA, the Saudi Minister of Investment, H.E. Khalid Al-Falih, made a noteworthy announcement. He clarified that the tax structure specifically for RHQs is currently in the process of being formulated. Furthermore, he assured that income generated by RHQs from specific activities will be eligible for tax relief.
The RHQ Requirements & Regulations in Saudi Arabia
1. Your business must operate in two other countries, in addition to Saudi Arabia or where the main office is.
2. The RHQ in Saudi Arabia must be a different part or branch of the main company.
3. Mandatory activities should start within six months of receiving the RHQ License from MISA. Read our blog to learn more about MISA License Unlock Profitable Business Opportunities in KSA
4. Get a copy of the annual audited consolidated financial statements of the last financial year attested at the level of the Saudi Embassy.
7. Fill out the RHQ online form.
Types of RHQ Activities in Saudi Arabia
The RHQ activities in Saudi Arabia are divided into two main categories: mandatory and optional.
1. Mandatory RHQ Activities:
Strategic Direction Functions:
- Formulation and oversight of regional strategies
- Coordination for strategic alignment
- Integration of products/services in the region
- Support for mergers, acquisitions, and divestments
- Financial performance reviews
Management Functions:
- Business planning and budgeting
- Coordination of business activities
- Spotting new market opportunities
- Monitoring regional market trends, competitors, and operations
- Creating marketing strategies for the region
- Reporting, both operational and financial
2. Optional RHQ Activities:
- Support for sales and marketing
- HR and personnel management
- Training services
- Financial oversight
- Treasury and foreign exchange services
- Compliance and internal controls
- Accounting, legal, and auditing functions
- Research, analysis, and advisory services
- Operational control and logistics
- Supply chain management and international trading
- Technical or engineering support
- IT network operations
- Research and development initiatives
- Intellectual property rights management
- Production oversight
- Sourcing raw materials and components.
Saudi RHQ Licence Fee
The annual fee of RHQ in Saudi Arabia is SAR 2,000, plus SAR 10,000 in the first year. The licence validity can last from 1 to 5 years.
Benefits of Getting an RHQ Licence in Saudi Arabia
1. Exception from Saudization requirements for 10 years
2. Get work visas for jobs restricted to Saudi nationals.
3. No limit on the work visas for RHQ employees.
4. Dependents of RHQ workers can work and find jobs with the Ajeer programme.
5. Sons of RHQ workers can stay until they are 25 years of age.
6. RHQ workers don't need Saudi work qualifications if they have them from their home country.
7. No fees for MISA after the first year.
8. Cheaper services from MISA.
Streamline Your Regional Headquarter Set-up Process in KSA
Navigating the process of obtaining the RHQ license and setting up a business in Saudi Arabia can be challenging for those who are not familiar with the regulations and procedures. That's where TASC comes in. Our strong relationship with the Ministry of Investment (MISA) enables us to provide you with 360-degree assistance, from developing an in-depth understanding of the Saudi market to finding and hiring competent Saudis and expat talent and managing all the GRO requirements for your business.
With over 15+ years of local and global experience, our business setup experts can help you set up your business according to the latest legal requirements.
Get a free consultation with our business setup experts now to launch your operations in the Kingdom of Saudi Arabia.
