The Saudi Zakat, Tax, and Customs Authority (ZATCA) has published guidelines detailing the new Regional Headquarters (RHQ) Program in the country. As per previous reports, the RHQ program offers tax advantages such as a 0% corporate income tax rate and a 0% withholding tax rate on approved RHQ-related activities. The tax incentives are granted for 30 years and can be renewed.
The guidelines provide:
- A comprehensive overview of the RHQ program which includes eligibility requirements, incentives offered, and the registration process;
- A deeper look at the economic substance requirements for the RHQ program;
- Clarification on the application of income tax incentives and cases where these incentives do not apply with detailed examples;
- Guidelines on tax residency and permanent establishment related to the RHQ program;
- An explanation of taxes relevant to the RHQ program such as including withholding tax, Zakat, VAT, transfer pricing, and taxes on real estate transactions;
- Insights on how tax treaties will be applied subject to the cross-border transactions of RHQs;
- A guide to tax procedures for RHQs which includes tax registration, tax return filings,m tax payments, tax assessments, record-keeping rules, penalties for non-compliance, etc.
On 16 February 2024, ZATCA published the Regional Headquarters Tax Rules in the Official Gazette.
