Saudi Arabia: Establishment of Four New Special Economic Zones

On 14 April 2023, the Saudi government announced the establishment of four new Special Economic Zones (SEZs) across various regions of the country. These zones aim to offer competitive incentives for businesses who will invest in such zones. The move is part of the Kingdom's vision to be a global business hub and contribute to achieving the Kingdom’s economic development goals according to Vision 2030.

Key Incentives

The incentives offered by these new SEZs 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 and supportive regulations around foreign talent during the first 5 years
• 0% VAT for all intra-SEZ goods exchanged within and between the SEZs
• Special tax treatment in line with OECD principles to avoid double taxation
• Competitive rate of utilities, notably electricity
• Exemption from operational fees for employees and their families within SEZ

The Four Special Economic Zones

1. King Abdullah Economic City (KAEC) SEZ: Located in the Makkah province and spanning 60km2, the KAEC SEZ focuses on sectors such as automobile supply chain and assembly, consumer goods, ICT (Electronic light manufacturing), pharmaceutical, MedTech, and logistics.
2. Ras Al Khair SEZ: Located in the Eastern province and covering an area of 20km2, the Ras Al Khair SEZ is focused on shipbuilding and MRO, and rig platforms and MRO.
3. Jazan SEZ: Located in the Jazan province and spanning 24.6Km2, the Jazan SEZ is focused on food processing, metal conversion, and logistics.
4. Cloud Computing SEZ: Located at the Innovation Tower at King Abdulaziz City for Science and Technology in Riyadh, the Cloud Computing SEZ is focused on providing cloud computing services.

Detailed Incentives for Each SEZ

These economic zones are meant to attract foreign entities to set up in the Kingdom as part of its drive towards vision2030. Much like how Dubai had initiated plans a few decades ago, KSA is following suit but is hyper accelerating all of its plans to ensure this becomes a lucrative place for businesses to operate in.