{"id":2045,"date":"2024-02-19T07:26:58","date_gmt":"2024-02-19T07:26:58","guid":{"rendered":"https:\/\/sa.andersen.com\/?post_type=myblog&p=2045"},"modified":"2024-02-19T09:50:46","modified_gmt":"2024-02-19T09:50:46","slug":"saudi-arabia-tax-rules-for-rhq-regime","status":"publish","type":"myblog","link":"https:\/\/sa.andersen.com\/ar\/myblog\/saudi-arabia-tax-rules-for-rhq-regime\/","title":{"rendered":"Saudi Arabia \u2013 Tax rules for RHQ regime"},"content":{"rendered":"
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Multinational Corporations (MNCs) with Regional Headquarters (RHQ) in Saudi Arabia must be relieved and reassured with the much-awaited Tax Rules published by ZATCA for RHQ regime. The \u201ckey points\u201d from the Tax Rules for RHQ regime have been summarised for your considerations<\/p>\n\n\n\n

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\u0627\u0644\u0639\u0646\u0627\u0648\u064a\u0646 \u0627\u0644\u0631\u0626\u064a\u0633\u064a\u0629<\/strong><\/th>\u0627\u0644\u062a\u0641\u0627\u0635\u064a\u0644<\/strong><\/th><\/tr><\/thead>
\u062e\u0644\u0641\u064a\u0629 \u0627\u0644\u0628\u0631\u0646\u0627\u0645\u062c \u0648\u062a\u0637\u0648\u064a\u0631\u0647<\/td>ZATCA has issued tax rules related to RHQ regime as on 4 February 2024<\/a>. To understand the concepts related to RHQ, kindly access our newsletter for RHQ regime in KSA<\/a>\n\n <\/td><\/tr>
Key points for considerations<\/td>\n
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  • Eligible activities :<\/strong> The activities of RHQ shall be strengthening the group\u2019s profile in the region, providing strategic supervision, administrative guidance and support for the internal business of the company, subsidiaries, and other related companies\n
  • Eligible income :<\/strong> Income from eligible activities derived by the RHQ\n
  • Incentives :<\/strong> [a] Zero percent income tax [b] Zero percent withholding tax on dividends, payment to related persons, and unrelated persons for services that are necessary for RHQ regime\n
  • Duration of incentives :<\/strong> 30-year period or cease of RHQ, whichever is earlier\n
  • Economic substance regulations<\/strong>\n
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    • Shall carry out activities within the scope of such license;\n
    • Must have adequate premises to accommodate the business activities;\n
    • Activities shall be \u201cdirected and managed\u201d within Kingdom, including holding board meetings, where strategic decisions are made;\n
    • Must incur operational expenditure in Kingdom;\n
    • Must generate revenues from eligible activities;\n
    • Must have at least one resident Director in the Kingdom;\n
    • Must employ adequate number of full-time employees in a tax year; and\n
    • Employees must have requisite qualifications and skills necessary to execute their duties and fulfill their responsibilities \n <\/ul>\n
    • Tax Ruling :<\/strong> MNC\u2019s may consider submitting for a Tax ruling to obtain detailed interpretation or clarifications on taxation matters\n <\/ul>\n <\/td><\/tr>
Compliance requirements<\/td>\n
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  • Must prepare and maintain accounts for the tax year, including partial tax year;\n
  • Maintain separate books of accounts for non-eligible activities;\n
  • Shall file Tax and Zakat returns, as applicable ; and\n
  • Must file annual report using the format prescribed to comply with Economic Substance requirements\n <\/ul>\n <\/td><\/tr>
Penalties<\/td>\n

ZATCA shall notify of the violation and grant 90 days to comply with the rules<\/p>\n

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  • SAR 100,000 fine, provided the violation is complied within the time granted (\u201cinitial fine\u201d);\n
  • SAR 400,00 fine, failure to comply with violation within 90 days from imposing the initial fine, or if the same violation is repeated within 3-years from imposing the initial fine;\n
  • Suspension of tax incentives, if the violation continues after the fine prescribed\n <\/ul>\n <\/td><\/tr>
AAnti- Avoidance<\/td>\n
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  • Mandatory transfer pricing documentation compliance\n
  • May revoke tax incentives \u2013 cases were [a] submission of intentional false or misleading information; [b] misusing tax incentives; and [c] payments to non-residents on behalf of persons that do not qualify for Tax Incentives\n <\/ul>\n <\/td><\/tr>
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