The 30-year 0% deal — and its limits
The RHQ headline is real: 30 years of zero corporate and withholding tax under Royal Decree M/62. The fine print is where groups win or lose it — it applies only to eligible income, and only while the substance holds.
Thirty years, two zeros
A licensed RHQ that meets MISA's conditions and satisfies ZATCA's Economic Substance Requirements receives, under Royal Decree M/62, a 30-year package: 0% corporate income tax on eligible RHQ income and 0% withholding tax on qualifying cross-border payments. The incentive became effective 16 December 2023, with detailed guidelines published by the Zakat, Tax and Customs Authority (ZATCA) on 15 April 2024. The clock starts at the licence-issue date and the period is renewable.
It is a genuinely large incentive — against a standard 20% corporate rate, three decades at zero on qualifying activity is worth millions over its life. But every word of it is load-bearing: “eligible,” “qualifying,” and the unstated condition that the substance behind the licence stays real. The programme is, in ZATCA's framing, a contract: thirty years of relief in exchange for genuine, ongoing substance in the Kingdom.
Covered — and pointedly not
Eligible RHQ income
- Corporate income tax on income from eligible RHQ activities
- Withholding tax on dividends
- WHT on royalties and payments to non-resident related parties for RHQ services
- Applied for 30 years from the licence-issue date, renewable
Everything else
- Any separate Saudi operating business — taxed at 20%
- Income from outside the eligible RHQ activities
- VAT at 15%, Zakat and real-estate transaction tax
- Arrangements linked to tax avoidance or ineligible activity
The relief attaches to income from eligible RHQ activities — strategic direction, management and the optional functions the licence covers — not to whatever the entity happens to earn. If the group also runs a plant, a retail arm or a services line in the Kingdom, that activity is taxed under the normal rules.
The taxes the incentive doesn't touch
| Tax | On eligible RHQ income | Otherwise |
|---|---|---|
| Corporate income tax | 0% | 20% on foreign-owned operating income |
| Withholding tax | 0% on qualifying payments | 5–20% by payment type |
| VAT | 15% | 15% |
| Zakat | Applies to the Saudi/GCC share | Applies |
| Real-estate transaction tax | Applies | Applies |
The RHQ relief is a ring-fence around eligible income, not a blanket exemption — which is exactly why the boundary between eligible RHQ income and any operating income has to be drawn cleanly and defended.
Mobility and workforce perks that matter as much
250 work visas from day one
A block of visas allocated at licensing, without the usual expat-quota friction.
10-year Saudization exemption
Relief from Nitaqat percentage requirements for a decade, to hire international talent freely.
Accelerated executive visas
Fast-track visas for senior executives and their spouses and dependants.
Government-contract access
The other side of the mandate — eligibility for public tenders above SAR 1 million.
Visa allocations and the Saudization-exemption term have been adjusted over the programme's life. Treat the numbers here as the published position and confirm the current figures on the ZATCA and MISA portals before relying on them.
Where the deal is won or lost
Eligible vs operating income
Only income from eligible activities qualifies. Blur the line with operating income and you invite tax on the lot — the definition has to be drawn and defended.
Substance is a condition
The 0% is contingent on ZATCA's Economic Substance Requirements — real office, 15+ staff, executives, decisions in Riyadh. Fail and ZATCA issues a notice with 90 days to fix; persistent failure puts the relief at risk.
Transfer pricing
The eligible income arrives through intra-group charges, which must be at arm's length and documented. Mispriced group fees are the fastest way to unwind the benefit.
Build the tax position, don't just claim it
The groups that hold the 30-year position treat it as a structure to build, not a rate to claim: a clean split between eligible RHQ activities and any operating business, substance that satisfies ZATCA's annual audit, and transfer-pricing documentation for every intra-group charge. Where the position is material, a formal ruling from ZATCA can lock in certainty before you rely on it. Done this way, the 30 years are real and defensible; treated as a headline to capture, the rate turns fragile at the first audit.
A worked sense of the saving
Put rough numbers on it. A standard foreign-owned entity pays 20% corporate income tax on its taxable profit; a qualifying RHQ pays 0% on eligible RHQ income for thirty years. On eligible profit of, say, SAR 40 million a year, that is a difference of roughly SAR 8 million annually — before counting the 0% withholding tax on dividends and qualifying payments, which for a group that repatriates regularly can be material in its own right. Over the thirty-year horizon, and allowing for growth, the headline saving runs into the hundreds of millions for a sizeable regional operation.
Two cautions keep that figure honest. First, the saving applies only to eligible income — the management and coordination functions the licence covers — not to any operating business the group also runs in the Kingdom. Second, the figure is a gross headline; the net benefit depends on the substance cost you carry to earn it and on the Pillar Two position below. The point of the example is direction and scale, not a promise: model your own eligible-income base before you bank a number.
Why 0% may not stay 0% for large groups
For the largest multinationals, the headline needs a Pillar Two lens. Saudi Arabia has moved to implement the OECD's global minimum tax, and a group within scope — broadly, consolidated revenue of €750 million or more — can face a top-up that brings its effective rate on low-taxed income toward 15%. An RHQ taxed at 0% domestically could therefore see part of that benefit clawed back at group level under the minimum-tax rules, depending on the group's overall position and where the top-up is collected.
For most mid-market groups below the €750 million threshold, the 0% stands undiluted. For the giants the programme was partly designed to attract, the tax line still needs to be modelled through the global-minimum-tax rules before it is relied on — the RHQ may remain compelling on contract access, mobility and location grounds, but the headline tax saving is not automatically what the brochure says. Confirm the current interaction with a qualified adviser, as the domestic top-up rules are still bedding in.
Questions we get asked first
What exactly does the RHQ 0% rate cover?
0% corporate income tax on income from eligible RHQ activities, and 0% withholding tax on dividends, royalties and qualifying payments to non-resident related parties for RHQ services. Income outside the eligible activities is not covered.
How long does it last, and is it renewable?
Thirty years from the licence-issue date, and renewable — provided the RHQ keeps meeting MISA's conditions and ZATCA's Economic Substance Requirements. It took effect on 16 December 2023 under Royal Decree M/62.
Does it cover my other Saudi business?
No. Any separate operating business in Saudi Arabia is taxed under the normal 20% rules. The relief ring-fences eligible RHQ income only.
Do I still pay VAT and Zakat?
Yes. VAT at 15%, Zakat on the Saudi/GCC share, and real-estate transaction tax all remain payable. The incentive is a corporate-income and withholding-tax relief, not a blanket exemption.
What non-tax benefits come with it?
A block of work visas from day one, a ten-year Saudization exemption, and accelerated visas for senior executives and their dependants — plus eligibility for government contracts above SAR 1 million. Confirm current visa and exemption figures on the official portals.
What can undo the benefit?
Losing economic substance, blurring eligible and operating income, or running mispriced intra-group charges. Each can trigger tax, penalties, or — if substance fails persistently after ZATCA's 90-day notice — loss of the relief.
A 30-year prize, with three strings attached
Zero tax for three decades is worth building for — but the deal is defined by its limits: eligible income only, substance always, transfer pricing throughout. Treat it as a position to engineer and evidence, and it is one of the most valuable tax outcomes in the region. Treat it as a headline to claim, and it turns fragile at the first ZATCA audit.
Structure the incentive so it survives audit
We ring-fence eligible income, align substance and transfer pricing, and — where it's material — help secure a ZATCA ruling before you rely on the 0%.
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This article is general information, current as of 2026, and is not legal or tax advice for any specific situation. Confirm current rules and official Arabic texts with the relevant authority before acting.