Some companies exempted from condition of local headquarters in Saudi Arabia

Saudi Arabia has given permission to some companies to operate in the kingdom without having local headquarters.   

These are the firms whose foreign operations do not exceed 1 million SAR ($266,000).

Companies competing for government contracts without any other bidders are also exempt from the rules.

The development comes after rules introduced in 2021 that required foreign firms to set up regional headquarters in the country by the end of this year or risk losing out on government contracts.

Companies will not be able to sign contracts with anybody, institution or fund affiliated to the government or its agencies without a headquarters in the kingdom, according to the restrictions.

Government agencies working with foreign companies who do not have a Saudi headquarter will have to submit a letter of explanation within 30 days of signing a contract.

Saudi officials hope for 480 companies to establish headquarters in the kingdom by 2030 as it looks to generate new industry and diversify the oil-rich economy.

In October 2021, 44 companies were granted licenses to set up headquarters in the kingdom. The companies that had already relocated their regional headquarters by then included PepsiCo, DiDi, Unliver, Siemens, KPMG, Novartis, Baker Hughes, Halliburton, Philips, Flour, Schlumberger, SAP, PwC, Oyo, Boston Scientific and Tim Hortons.

The kingdom's Regional Headquarters Attraction Programme of Multinational Companies, a Vision 2030 initiative, is expected to yield significant local benefits to Saudi Arabia's economy. The move is designed to also provide opportunities for local talent to work with multinational companies.

Vision 2030 has led to significant project announcements across various sectors to support the country's ambitions for economic diversification. Saudi Arabia made a strong rebound from the coronavirus-induced slowdown, with economic momentum picking up pace last year amid a sharp rise in oil prices.

According an S&P Global Ratings report, key sectors of Saudi economy, from real estate to tourism and energy, are set to benefit from investments flow through the Vision 2030 programme.

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