The Impact of Saudi Arabia's New Headquarters Policy on Business and Growth

In 2021, the Kingdom of Saudi Arabia announced that starting in 2024, international companies without a regional headquarters (RHQ) license in the country will no longer be eligible for government contracts. The programme is designed to diversify the economy and reduce its reliance on oil.

In this article, we will provide an informative guide to the RHQ programme, the goals behind the initiative, its progress, and its impact on economic growth and the business landscape for MNCs in Saudi Arabia.

Overview of RHQ Programme and Goals

The Regional Headquarters Programme (RHQ) was introduced as part of the Vision 2030 plan. It took effect on January 01, 2024, with the goal of attracting approximately 480 multinational corporations (MNCs) to relocate their HQ region to the kingdom by 2030. Through this, Saudi Arabia looks to diversify its economy, reduce reliance on oil sectors, and position the country as a major business hub.

There are minimal exceptions to this new RHQ policy, with possibilities to impact the contracts with state-owned enterprises as well. Some MNC companies in Saudi Arabia are also concerned that the government could adjust the requirements for the HQ region programme over time, potentially mandating greater executive presence or introducing stricter criteria.

From Saudi’s point of view, this policy will ensure the sustained presence of MNCs in the country and retain more corporate expenditure in the economy.

As of 2025, over 540 multinational companies have become participants, exceeding Saudi Arabia’s original target of 500 companies by 2030. This shows that more companies favour the HQ region requirements and consider it worthwhile. Participants span multiple sectors, including technology firms like Amazon and Google, as well as professional services companies like PwC and Deloitte.

More recently, the asset management giant BlackRock announced that it received approval to set up its regional headquarters in Riyadh. This approval comes ahead of the company's plans to launch an investment platform called BlackRock Riyadh Investment Management (BRIM), which is expected to bring more FDI into the Kingdom.

Other MNCs are adapting to the new HQ region mandate and are assessing loopholes such as how many executives and employees are required to work from the Saudi-based HQ, tax implications, and the percentage of locals (Saudi citizens) that need to be hired.

Saudi Arabia sees this initiative as a long-term effort and is hoping to shift decision-making personnel to the country. The government believes that making senior leaders live in Saudi allows them to see new opportunities and grow their business in a way that benefits their business and the country altogether.

All this time, there has only been a transactional relationship in the Saudi business landscape, where companies exclusively benefit from government procurement and incentives initiated to create a favourable business environment with hardly any economic footprint in the country. The new HQ region programme targets to redefine this current dynamic.

Benefits of the RHQ Programme for Businesses in Saudi Arabia

Any MNC company in Saudi Arabia that wants to participate in the new HQ region programme can expect a wide range of incentives and benefits. This includes the ability to issue an unlimited number of visas to RHQ employees and a 10-year exemption from the “Saudization” requirements.

Saudization (also known as Nitaqat) is a government policy in Saudi Arabia aimed at increasing the employment of locals (Saudi nationals) in the private sector. It requires companies to hire a certain percentage of Saudi employees, reducing reliance on foreign workers.

Employees working at the regional headquarters established in Saudi who hold valid accreditations in their home countries are also exempt from meeting the local professional accreditation requirements. These benefits stretch further with plans to offer job opportunities for the dependents of RHQ employees.

An MNC company in Saudi Arabia that participates in the program will, under current rules, enjoy a 0% corporate income tax and withholding tax rate for 30 years after the RHQ license is issued.

What The HQ Region Policy Means for the Economy and Growth

1. Challenging the UAE’s Monopoly on Regional HQs

According to Forbes Middle East, in 2021, Saudi Arabia hosted less than 5% of the regional MNC company headquarters, which reflects a significant contrast to the UAE, which now hosts the regional HQ for 76% of companies.

From an economic viewpoint, the RHQ Programme was initiated as a deliberate move to upend the monopoly market the UAE maintains in hosting MNC headquarters. With many multinational companies already considering Saudi Arabia as their largest market, the policy will encourage them to shift their HQs to the country instead of the UAE.

2. Creating New Jobs for the Saudis

Another significant impact of the RHQ programme is that the country can expect to see more jobs for the locals. This goal aligns with the government's initiatives to diversify the economy as part of the Vision 2030 project.

Through the HQ region requirement, the Saudi government pursues foreign companies to reinvest some of their profits in society and focus on training and transferring knowledge to the locals.

Any MNC company in Saudi Arabia looking to participate in the RHQ programme needs to ensure its plans align with the goals of Vision 2030, especially in terms of creating jobs and training people.

3. Economic Diversification

Two-thirds of Saudi Arabia’s approximately 35 million people are under 35, presenting both an opportunity and a challenge.

Saudi Arabia’s non-oil sector grew by 6% in 2022. Regardless of the growth, since 2011, oil rent has contributed less to the kingdom’s GDP, although it still remains a significant source of revenue.

With the Saudi RHQ Programme stimulating multinational companies to establish their RHQs within the Kingdom, the reliance on the oil sector can be expected to reduce. This will also expand the country’s economic base by attracting investment into non-oil industries such as finance, technology, healthcare, tourism, and manufacturing.

By shifting the focus of economic growth from traditional oil revenues to more service and knowledge-based sectors, the HQ region policy will also strongly align with the primary goals of Vision 2030, which is to foster innovation, create high-skilled jobs, and fuel a thriving economy.

The presence of multinational HQs brings expertise, advanced technology, and international best practices, further accelerating the growth of emerging sectors and strengthening the Kingdom’s global economic influence.

4. Increase Foreign Direct Investment

Although the UAE’s GDP is half the size of Saudi Arabia, the UAE has consistently received more foreign direct investments since 2013. This impressive preference for businesses to set up their headquarters in the UAE is primarily rooted in their ease of doing business and liberal social policies that have appealed to expats.

The RHQ programme is designed to break market monopolies and incentivise multinational companies to set up their regional headquarters in Saudi Arabia, nurturing a more competitive and dynamic business environment.

5. Strengthening Saudi Arabia’s Global Business Presence

When more MNC companies establish their headquarters in Saudi, the country gains a significant advantage in terms of the ability to have a stronger voice during regional and global economic discussions.

The presence of HQs in Saudi Arabia will boost supporting industries like banking, real estate, and legal services.

Corporate Responses to Saudi Arabia’s Regional Headquarters Policy

The majority of the MNC companies in Saudi Arabia find the rapid pace of change in the country and the eagerness of the younger generation to drive transformations through the RHQ programme palpable. They believe the policy presents a myriad of business opportunities for companies that can adapt to the evolving market landscape and leverage Saudi Arabia’s growing economy.

Some companies still lack a full understanding of the new reality in the Kingdom. Nonetheless, a handful of businesses have described the RHQ initiative as a tax for doing business.

Reasons why business executives are hesitant or critical of the RHQ policy include:

• Talent Shortage – Limited availability of skilled local professionals.

• Conflicting Saudization Goals – RHQ exemptions clash with national employment policies.

• High Cost of Living – Expensive housing, utilities, and schooling.

• Tax Uncertainty – Lack of clarity on corporate taxation and potential double taxation.

• Rising Business Costs – Increased VAT (15%) and removal of key subsidies.

• Regulatory Uncertainty – Frequent policy changes and unclear implementation.

• UAE’s Competitive Edge – More developed infrastructure and business incentives in Dubai.

• Social and Political Concerns – Oversight, restrictions, and reputation risks.

• Gaps in Expat Lifestyle – Limited international schools and entertainment options.

• Policy Stability Concerns – Uncertainty about long-term consistency of incentives.

What to Expect in Saudi Arabia

Saudi can expect to see more participants in the RHQ programme if the country continues to accelerate its initiatives towards economic development and continue to propose pro-business reforms to attract and retain top companies.

The government should also consider investing more in educational reforms and re-skilling efforts that can strengthen the next generation of locals for future jobs.

If Saudi Arabia succeeds in its initiatives to transform the economy, it should be able to end the RHQ requirement in the next five years. By then, most foreign companies will already have or desire a strong presence in the largest regional market. This demand will grow if living and working conditions in Saudi Arabia continue to improve.

Frequently Asked Questions

What are the benefits of RHQ in Saudi Arabia?

Any MNC in Saudi Arabia considering the RHQ programme can expect benefits, including a 10-year exemption from Saudization requirements, a grant of Work visas (to RHQ employees) for Saudi nationals' restricted professions, and no limitation on the number of work visas that can be applied for RHQ employees.

What is the role of regional headquarters?

When an MNC company in Saudi Arabia sets up its regional headquarters in the country, it can manage its business and operations in different countries from one central location. It streamlines the operational processes for an MNC and can prove to be more efficient and profitable, as it allows for better control over the company's affairs.

What is the RHQ license in Saudi Arabia?

Companies that have obtained their RHQ license can operate their regional headquarters in the Kingdom of Saudi Arabia and conduct a range of activities such as managing, supervising, and providing strategic direction to their branches, affiliates, and subsidiaries globally.

What is the status of RHQ in Saudi Arabia?

The RHQ programme officially took effect, which means that Saudi government entities can no longer contract with companies that have regional headquarters outside of the Kingdom (with some exemptions). The Kingdom has already begun to enforce RHQ requirements in government procurement.

How much is the RHQ license fee?

The RHQ license has an annual fee of SAR 2,000 plus a one-time service fee of SAR 10,000 in the first year.