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Saudi Arabia attracts multinational companies.

 

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Mul­tina­tion­als that relo­cate their regional headquar­ters to Saudi Ara­bia this year with the aim of secur­ing luc­rat­ive gov­ern­ment con­tracts would be «likely» to receive tax relief said the king­dom’s invest­ment min­is­ter, as exec­ut­ives fear they could be taxed in more than one jur­is­dic­tion. Sev­eral said a key con­cern was that, in the absence of a tax­a­tion accord between Riy­adh and other Gulf states that could fall under the regional HQ’s over­sight, sub­si­di­ar­ies’ profits could be taxed twice. «So the moment you des­ig­nate that entity as your regional head office, all of your regional profits could then be tax­able in Saudi Ara­bia,» said one exec­ut­ive. Oper­a­tions out­side Saudi Ara­bia «will be taxed in those entit­ies’ coun­try of oper­a­tions.

They will not be inter­mingled or mixed with the regional headquar­ters,» he said. State-owned enter­prises, which dom­in­ate the eco­nomy, are set to spend hun­dreds of bil­lions of dol­lars on new projects over the next dec­ade, attract­ing mul­tina­tion­als to the king­dom. About 80 com­pan­ies, includ­ing Uni­lever and Siemens, have already been gran­ted licences to move their regional headquar­ters to the king­dom, with many expec­ted to be based in Riy­adh’s King Abdul­lah Fin­an­cial Dis­trict. In addition, Pep­siCo announced earlier this month that it had relo­cated its Middle East chief exec­ut­ive’s office to the king­dom.

The pro­gramme under­scored the grow­ing com­pet­i­tion with the UAE, which for years served as a regional hub for mul­tina­tion­als with its lais­sez-faire approach to busi­ness, socially lib­eral life­style and hub air­ports. To qual­ify as a regional HQ under the Saudi plans, the base must have over­sight of oper­a­tions in at least two other states. But Michael Bes­sey, of con­sult­ants Albright Stone­bridge Group, said the latest inform­a­tion from the invest­ment min­istry was that Saudi-based regional headquar­ters should serve as a base for the entire region.

www.sba.tax

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  1. Stephen6 March 2023 at 13:01

    I'm curious to see how the UAE will react to this because I don't see them just allowing this to happen without doing nothing at all.

    ReplyDelete
    Replies
    1. Clyde6 March 2023 at 14:25

      Yes, that will be interesting to see. Also it's something to see companies like Unilever move to Saudi Arabia. They must have serious benefits to do so.

      Delete

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