Background

The Economic Cities and Special Zones Authority (ECZA), in partnership with the Saudi Program for Attracting Regional Headquarters of International Companies,[1] hosted an Investment Forum on 29 May 2023, in Riyadh.The forum made an announcement regarding Saudi Arabia’s Special Economic Zones (SEZ), stating that they have been officially granted operational licenses and have attracted significant investments amounting to USD 12.6 billion. These investments span various sectors such as maritime, mining, manufacturing, logistics, and technology. Additionally, ongoing discussions for potential investments amounting to USD 31 billion highlight the strong interest and potential for further growth in the SEZs.Under the patronage of Crown Prince Mohammed bin Salman, ECZA has launched four new SEZs, which include:
  1. The King Abdullah Economic City SEZ
  2. Jazan SEZ
  3. Ras Al Khair SEZ
  4. Cloud Computing SEZ, located in the King Abdulaziz City for Science and Technology
The establishment of these SEZs aligns with Saudi Arabia’s state-centric policies and builds upon the success of the Special Integrated Logistics Zone (SILZ) launched in 2022. This strategic move aims to leverage the country’s rapid economic growth and global business prominence, contributing to the realisation of Saudi Arabia’s Vision 2030 economic development goals.

Key incentives for investment in the new SEZs

The new Saudi SEZs offer attractive incentives to businesses looking to invest in Saudi Arabia. Notably, these incentives include:
  • 5% Corporate Income Tax rate for up to 20 years.
  • 0% withholding tax on repatriation of profits from SEZ into foreign countries.
  • Customs duties deferral for goods inside SEZ or 0% Custom duties on capital equipment and inputs inside SEZ.
  • Flexible regulations for foreign talent in the initial five years.
  • 0% VAT on intra-SEZ goods (for all goods exchanged within and between the SEZs).
  • Special tax treatment in line with OECD principles to prevent double taxation.
  • Competitive utilities rates, including electricity.
  • Exemption from operational fees for employees and their families within SEZ.
(more…)