RIYADH: Multinational companies relocating their headquarters to Saudi Arabia in 2023 with the aim of securing government contracts could get tax exemptions, according to the Minister of Investment Khalid Al-Falih. During an interview with the British newspaper Financial Times, Al-Falih noted an announcement regarding incentives will be issued soon to clarify the regulations for global firms. The revelation from the minister comes at a time when Saudi Arabia is steadily becoming a regional hub for foreign direct investments, in line with the economic diversification goals outlined in Vision 2030. Al-Falih further clarified that the operations of multinational firms outside Saudi Arabia will be taxed in those entities’ country of operations, and will not be intermingled or mixed with the regional headquarters in the Kingdom. Saudi Arabia’s Ministry of Investments and the Royal Commission for Riyadh City launched the Regional Headquarters Program in 2021 to attract global companies to open their headquarters in the Kingdom. According to Al-Falih, these multinational companies that move their headquarters to the Kingdom will be taxed only for limited profits, and further suggested that these firms will be most likely granted tax relief. “The guiding principle is that the RHQ special purpose vehicle, which will be created in Saudi Arabia, will be only taxed for the limited — almost nothing — profits that they make within the RHQ . . . Most likely the limited income by the RHQ SPV will be granted tax relief,” said Al-Falih. Saudi Arabia is the biggest economy in the Middle East and North Africa region, and through the regional headquarters program, the Kingdom aims to reduce its dependence on oil revenues by transforming the nation into a trade hub. Al-Falih added that Saudi Arabia did not want to impose additional costs on companies entering the Kingdom. “We realized that we had to do everything we can through policy and regulation to ensure that the companies will not incur additional risks or costs from the alternative jurisdictions for managing their regional operations, and the biggest one of course is taxation,” he said. The Financial Times report added that 80 companies, including Unilever and Siemens, have already been granted licenses to move their regional headquarters to the Kingdom, with many expected to be based in Riyadh’s King Abdullah Financial District. It should be also noted that Pepsico, earlier this month, had announced that it had relocated its Middle East CEO office to Saudi Arabia. Earlier in February, a monthly report from the Kingdom’s Ministry of Investment revealed that Saudi Arabia issued 4,358 investment licenses in 2022, up 53.9 percent compared to 2021. “This increase reflects the growing position of Saudi Arabia as an attractive investment destination with competitive advantages including a stable and business-friendly investment environment,” said MISA in the report.