The RHQ mandate: why 2024 changed the calculus
Since 1 January 2024, a multinational without a Saudi regional headquarters is largely shut out of government contracts above SAR 1 million. Here is exactly who it hits, the exceptions, and why 700+ groups have already moved.
“No RHQ, no contract”
Under Cabinet Resolution 366 of December 2022, effective 1 January 2024, Saudi government agencies and state-owned entities — including the Public Investment Fund and its subsidiaries — generally cannot award contracts to a foreign multinational, or its related parties, unless the group holds a licensed regional headquarters in the Kingdom.
The intent is explicit: pull genuine regional decision-making into Saudi Arabia rather than let multinationals service the market from Dubai, Bahrain or further afield. In practice, tendering runs through the Etimad platform, where bidders must show the RHQ condition is met — or that a narrow exemption applies.
For any group whose Middle East revenue leans on Saudi public-sector work — ministries, SOEs, or giga-projects like NEOM and PIF ventures — the RHQ has shifted from a tax option to a market-access condition.
Where the rule bites — and where it doesn't
| Buyer or situation | RHQ required? |
|---|---|
| Government ministries & agencies | Yes — for contracts of SAR 1m or more |
| State-owned entities, PIF & subsidiaries | Yes |
| Giga-projects (NEOM, Red Sea, Qiddiya, Diriyah) | Yes — government-backed |
| Contracts below SAR 1 million | No — exempt |
| Work executed outside Saudi Arabia | No — outside scope |
| Private-sector customers | No — the rule covers public procurement only |
It applies to the group, not just the bidding entity — related parties are caught too. And the SAR 1 million threshold (about USD 266,000) is low for any government project of real scale.
Real, but narrow — and not a strategy
Low-value contracts
Procurement estimated below SAR 1 million can proceed without an RHQ.
Sole compliant bidder
Where only one technically compliant bid is submitted for a tender.
Materially cheaper best bid
Where the non-RHQ bid is the best offer and priced at least 25% below the next competitor.
Committee exemption
A government entity can request an exemption for a specific project — before the tender is launched, via Etimad.
Exemptions are project-specific, documented and heavily scrutinised, and the policy direction is toward tightening. Relying on the “sole bid” or “25% cheaper” routes is a gamble, not a plan. Groups doing sustained Saudi public-sector business treat the RHQ as a baseline requirement.
From a nice-to-have to a first-mover race
Before 2024, a regional office in Dubai and occasional flights to Riyadh were enough to serve Saudi Arabia. The mandate ended that model for anyone chasing public-sector work. Pairing the requirement with a 30-year 0% tax package turned it into something groups actively compete over: by early 2026, more than 700 multinationals had established Saudi RHQs — Amazon, Google, PwC and Deloitte among them.
The window hasn't closed, but the cost of delay is rising: as competitors localise, a foreign bidder without an RHQ increasingly can't reach the table at all.
The mandate is the stick; the 30-year 0% corporate and withholding tax package is the carrot — and both rest on real substance. See the 30-year deal and what substance actually requires.
Questions we get asked first
Who does the RHQ mandate apply to?
Foreign multinationals — and their related parties — that want to win contracts with Saudi government agencies and state-owned entities, including PIF and giga-projects, above SAR 1 million. It does not apply to private-sector business.
What is the contract threshold?
Government procurement estimated below SAR 1 million (about USD 266,000) is exempt. The threshold is low for any project of real scale and may be adjusted in future.
Are there exceptions?
Yes, but narrow: low-value contracts, a sole technically compliant bid, a best bid at least 25% cheaper than the next, work executed outside the Kingdom, and case-by-case committee exemptions processed through Etimad before a tender.
Does it apply to PIF projects like NEOM?
Yes. The rule covers government-backed entities, including the Public Investment Fund and its subsidiaries and the giga-projects.
Is the private sector affected?
Not currently. The “no RHQ, no contract” rule applies to public procurement — government agencies and state-owned entities — not to private-sector customers.
If Saudi public-sector work matters, the RHQ is the baseline
The honest answer to “do we need an RHQ?” depends on where your revenue comes from. If your Gulf business leans on Saudi government contracts, the mandate makes the RHQ close to mandatory — and the exemptions are too narrow to build a strategy on. The question is not whether, but when, and how to build the substance that keeps both the contract access and the tax deal intact.
Weighing an RHQ for market access?
We'll assess whether the mandate applies to your group, model the RHQ against your Saudi revenue, and build the substance that satisfies MISA and ZATCA.
Speak to an Advisor →Related reading
This article is general information, current as of 2026, and is not legal or tax advice for any specific situation. The mandate, thresholds and exemptions are being refined — confirm the current position with MISA or via Etimad before acting.