Overview of the Electronic Medical Devices in Saudi Arabia
Regional Headquarters Program
About Regional Headquarters Program
The Regional Headquarters (RHQ) Program has been introduced to increase foreign investment and bring diversification in the Saudi economy, aligned with the Vision 2030 framework. It is developed jointly by the Ministry of Investment Saudi Arabia (MISA) under its initiative ‘Invest Saudi’ and the Royal Commission for Riyadh City (RCRC) with an aim to encourage Multinational Companies (MNCs) to establish their regional headquarters within Saudi Arabia. As a significant development strategy of the Kingdom of Saudi Arabia’s government, the RHQ Program plays a crucial role in transforming Riyadh into a “leading global destination.”[1]
As defined by MISA, an RHQ in the Kingdom of Saudi Arabia is:
“a unit of a multinational group, duly established under the laws of the Kingdom of Saudi Arabia, for the purpose of supporting, managing, and providing strategic direction to its branches, subsidiaries and affiliates operating in the Middle East North Africa region.”
Invest Saudi
As the country’s unified investment brand, Invest Saudi aims to facilitate private sector businesses, international, and domestic investors by effectively communicating investment opportunities in the Kingdom. It operates under the supervision of MISA and promotes closer collaboration and coordination among various ministries, government authorities, and the private sector. Invest Saudi contributes to promote an expanding range of investment and business opportunities in the Kingdom to foster sustainable economic growth at the national level.
Support Provision for setting up your RHQ in the Kingdom
Relocation Services
• Temporary Office Space
• Apartments or Villas
• Local Recruitment
• Arrival Essentials
Concierge Services
• Reservations
• Event Organizers
• Sport & Fitness
• Personal Assistant
Facilitation Services
• Staffing
• Business Setup
• Home Labor Contractors
Professional Services
• Tax Consultancy
• GRO Services
• Opening Bank Accounts
Exclusive Discounts
• Airlines
• Office
• Accommodation
• Schools
Becoming Part of the RHQ Program
Before the establishment of the Regional Headquarters in Saudi Arabia, an applicant is required to obtain an RHQ license from MISA. Minimum eligibility condition for an RHQ License is:
• it must have at least two subsidiary companies or branches functioning in two different countries, except for the Kingdom of Saudi Arabia and the investor’s country of incorporation (i.e., the main headquarters).
Criteria for RHQ
• The RHQ of the Multinational group covered in this license shall operate as a registered foreign company or branch in Saudi Arabia.
• An RHQ has a separate legal identity in the Kingdom of Saudi Arabia either as a subsidiary or as a registered branch office of a Multinational Company.
• It has to maintain a physical office presence and serve as a central hub of administrative authority for the respective region.
• An RHQ is not to engage in any commercial activity that generates revenue (all commercial activities will be conducted by the company affiliates that hold a Service License, Commercial License, Industrial License, or any respective License for the commercial operations from MISA).
• Entities seeking to retain their RHQ license must select their business activities to be conducted in Saudi Arabia based on the following classification: Mandatory Activities and Optional Activities. An RHQ is required to engage in Mandatory Activities, specifically the “provision of strategic direction and management functions,” along with a choice of three Optional Activities as a minimum requirement. Following are the activities:
Mandatory Activities (all are required)
Provision of strategic direction:
• Formulate and monitor the regional strategy,
• Coordinate strategic alignment,
• Embed products and/or services in the region,
• Support acquisitions, mergers, and divestments, and
• Review financial performance.
Provision of management functions
• Business planning,
• Budgeting,
• Business coordination,
• Identification of new market opportunities,
• Monitoring of the regional market, competitors, and operations,
• Marketing plan for the region, and
• Operational and financial reporting.
Optional Activities (three are required)
• Sales and Marketing Support,
• Human Resources, and Personnel Management,
• Training Services,
• Financial Management, Foreign Exchange, and Treasury Centre Services
• Compliance and Internal Control,
• Accounting,
• Legal,
• Auditing,
• Research and Analysis,
• Advisory Services,
• Operations Control,
• Logistics and Supply chain management,
• International Trading,
• Technical Support or Engineering Assistance,
• Network Operations for IT System,
• Research and Development,
• Intellectual Property Rights Management,
• Production Management,
• Sourcing of Raw Materials and Parts.
• The RHQ must have 15 full-time employees within the first year.
• At least 3 mandatory RHQ activities’ employees must be of a Corporate Executives level (such as Regional MD, Executive VP, Vice-President, etc.)
Timeframe
The Multinational Group must start RHQ operations within six months after the license is granted, and it should establish three optional activities chosen in the first year of the license operation.
RHQ License fee & Validity
The RHQ license entails an annual fee of SAR 2,000 and an initial one-time service fee of SAR 10,000 (limited to the first year). Certain application tiers may qualify for additional fee waivers. The RHQ license duration ranges from 1 year to 5 years (based on applicant selection).
Required Documents
• Commercial registration of the applicant company attested at the level of the Saudi embassy at the relevant company
• Copies of at least two commercial registrations or commercial licenses of the MNC issued in two different countries (excluding the Kingdom of Saudi Arabia and the country in which the headquarters of the Multinational Group is located) attested at the level of the Saudi Embassy in the respective countries
• Copy of the annual audited consolidated financial statements of the last financial year of the applicant, attested at the level of the Saudi Embassy in the respective country.
• A completed RHQ License Online Application Form.
Contracting with Government Entities
On December 27, 2022, the Council of Ministers in Saudi Arabia issued a resolution endorsing the Regulations governing government agencies’ contracting procedures with entities and their related parties that lack an RHQ in Saudi Arabia.
Effective from January 1, 2024, these Regulations prohibit all government agencies from entering into contracts or procuring goods and services from companies without an RHQ in Saudi Arabia and their affiliated entities.
Exceptions[2]
In the following cases, government agencies (ministries, governmental entities, public bodies, departments, institutions, and independent agencies) may enter contract with MNCs or their affiliated entities even without having an RHQ established in Saudi Arabia:
• works and procurements with an estimated value of less than SAR 1 million (such threshold may be amended from time to time)
• the works and procurements are to be executed outside the KSA
MNCs or their related parties that do not have an RHQ in Saudi Arabia are allowed to participate in public tenders initiated by Government Agencies. However, these bids will only be accepted under the following circumstances:
• where there is only one technically acceptable offer
• if, an offer submitted by a company without its RHQ in the KSA, is the best offer from a technical perspective and has a value of less than 25% or more than the value of the second-best offer received by that government agency
In limited tender situations, Government Agencies have the authority to invite MNCs or their related parties that do not have an RHQ in Saudi Arabia to participate in limited tenders. This invitation can occur in the following cases:
• where there is only one qualified bidder, excluding companies or related parties without an RHQ in Saudi Arabia
• an emergency situation that can only be dealt with by inviting or directly contracting with companies that do not have a RHQ in the Kingdom. (The regulations define an emergency situation as a situation in which a threat to public safety, public security or public health is serious and unexpected or in which a breach threatens loss of life or property)
Government Agencies have the authority to invite MNCs or their related parties to participate in direct purchases, but only if either of the following two conditions are met:
• the works or procurements in question can only be serviced by companies without an RHQ in the Kingdom
• In cases of emergency where addressing the situation requires direct purchases from the company which does not have its RHQ in Saudi Arabia
Incentives for the Companies
As part of the RHQ program, MNCs will receive significant incentives for joining this remarkable economic initiative and relocating their regional headquarters to Saudi Arabia, the largest economy in the MENA region.
In addition to the opportunity to participate in government tenders, the RHQ program provides the following incentives to MNCs:
• Ten-year exemption from Saudization requirements.
• Visas for employment in professions that are limited to Saudi nationals are available for RHQ employees.
• The RHQ entity has no exemptions on work visa limits for its employees.
• Work permits for spouses of RHQ employees through Ajeer Program.
• The age limit for male dependents of RHQ employees to qualify for residency has been extended up to 25 years old (this policy applies to male dependents who are still enrolled as students, while unmarried female dependents face no age restrictions).
• Waiver of Professional Accreditation requirements in the Kingdom if they possess valid accreditation from their country of origin.
• After the initial year, RHQ participants are granted an exemption from paying MISA subscription fees for accessing MISA investor service centres.
• RHQ participants can avail themselves of MIZA’s* comprehensive services (business, personal and concierge services) at discounted rates and receive preferential treatment.
*MIZA is a value-added service offering program by MISA, that emerged to enrich the experience of its partners in the Kingdom by offering management, legal, personal, operational, corporate, financial, human resources, and logistics services.
• Special Economic Zones (SEZs)
The newly established Special Economic Zones, namely King Abdullah Economic City (KAEC) SEZ, Ras Al-Khair SEZ, Jazan SEZ, and Cloud Computing SEZ, are strategically located throughout the country. Expanding upon previous efforts to enhance Saudi Arabia’s position as a leading global investment destination, these SEZs are designed to diversify the economy and enhance competitiveness offering infrastructure and logistics support and advanced connectivity to the businesses.
Establishing RHQ in SEZ will facilitate MNCs as 13%[3] of global trade occurs through the Red Sea, and these SEZs offer seamless connectivity to global supply chains. Moreover, by leveraging the already established and top-notch infrastructure in these zones, along with the world’s most efficient port (as recognized by the World Bank in 2022), your company can easily tap into this strategic location for enhancing business operations.
Dependent on zone and sector, investors gain access to a range of advantages such as withholding and value-added tax exemptions, income tax reductions, deferred custom duties on goods entered the SEZ, flexible and supportive regulations around foreign talent, and operational fees waiver for employees and their families within SEZ.
Opportunity for Multinational Companies to Flourish in Saudi Arabia
The present moment presents a prime opportunity for MNCs to actively engage in Saudi Vision 2030 and tap into the diverse opportunities offered by the largest economy and oil exporting nation in the region. In order to enhance competitiveness in securing government contracts, bids, and projects, the RHQ program strongly encourages MNCs to consider relocating their regional headquarters from locations like Dubai and other GCC countries to Saudi Arabia.
At LocalEyes, we possess the needed resources and capabilities to provide comprehensive assistance by developing the business case, supporting with executive research and manpower, providing our comprehensive Local Content solutions which play key role in Vision 2030’s Diversification of Economy, coordinating and consulting with key stakeholders (MISA and other entities of relevance) for attaining the RHQ License and enabling you to establish and operate your Regional Headquarters in the Kingdom of opportunities. Our in-depth understanding of the programs and policies as well as close contact with the relevant authorities enable us to provide services from opportunity development to project realization.
For any inquiries or assistance in application for the RHQ License, please feel free to reach out to our dedicated team based in Riyadh, Saudi Arabia. We are eager to provide you with our value-added services which support the RHQ Program.
- Riyadh Region, Invest Saudi
- KSA: Regional headquarters program, PwC (March 2023)
- The Kingdom of Saudi Arabia, Economic Cities and Special Zones Authority
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