The Regional Headquarters (RHQ) Program in Saudi Arabia offers a groundbreaking 0% corporate tax rate and other incentives to attract multinational companies to establish their regional base in the Kingdom. While these incentives significantly reduce tax liabilities, RHQs must still comply with filing obligations under the Zakat, Tax and Customs Authority (ZATCA). This guide covers the process, compliance requirements, and strategic considerations for RHQs benefiting from 0% tax incentives.
🏢 Overview of the RHQ Program
Saudi Arabia’s RHQ program is designed to make the Kingdom a hub for multinational corporations operating in the Middle East and North Africa. Qualifying RHQs enjoy 0% corporate income tax and withholding tax on qualifying activities for up to 30 years, provided they meet operational, staffing, and governance criteria.
📋 Filing Obligations for RHQs
Even with a 0% tax rate, RHQs are still required to file annual returns to ZATCA to maintain compliance and eligibility for incentives. Filing confirms the RHQ’s status, operations, and compliance with program conditions.
- Annual Income Tax Return – Filed electronically via ZATCA’s portal.
- Annual Zakat Return – If applicable for mixed-ownership or Saudi shareholders.
- Supporting Documentation – Proof of qualifying RHQ activities, staffing levels, and governance structures.
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🛠 Step-by-Step Process for Filing RHQ Returns
- Log into ZATCA’s E-Services using the corporate account credentials.
- Select Corporate Income Tax and choose Annual Return.
- Indicate RHQ status and eligibility under the 0% incentive program.
- Provide financial statements, even if no tax is due, to show compliance.
- Attach supporting documents such as:
- Proof of RHQ licensing from the Ministry of Investment (MISA).
- Organizational structure demonstrating regional management role.
- Employment records meeting Saudization and staffing requirements.
- Submit return and retain acknowledgment for record-keeping.
⚖️ Key Compliance Considerations
- Activity Restriction – Only qualifying activities are eligible for the 0% tax rate; non-qualifying activities may be taxed.
- Substance Requirements – Must employ a minimum number of full-time staff and maintain a physical office in Saudi Arabia.
- Annual Reporting – Late filing can risk losing the incentive.
- Audit Preparedness – Maintain clear records for potential ZATCA review.
📊 Common Mistakes to Avoid
Many RHQs mistakenly assume that 0% tax means no filing obligations. This misconception can lead to penalties or disqualification from the program. Ensure all reports are accurate, deadlines are met, and supporting documents are complete.
🏁 Conclusion
Filing returns for RHQs with 0% tax incentives in Saudi Arabia is more than a formality—it is a compliance requirement that safeguards your eligibility for long-term tax benefits. Corporate taxpayers should prioritize accurate reporting, maintain all supporting documentation, and engage tax professionals to ensure adherence to ZATCA regulations while enjoying the full benefits of the RHQ program.
