Saudi Arabia: Special economic zones in the Kingdom of Saudi Arabia

The Kingdom of Saudi Arabia launched the first 5 special economic zones with special trading systems, to accelerate economic diversification and enable investors to do business in the Kingdom. 

These zones support a range of industrial sectors and commercial activities, making it easier for investors to accelerate the development of their businesses regionally and internationally by providing an interconnected market with global markets. 

These zones include: the Special Economic Zone in King Abdullah Economic City, the Special Economic Zone in Ras Al-Khair, the Special Economic Zone in Jazan, the Special Economic Zone for Cloud Computing and Informatics, and the Special Integrated Logistics Zone in Riyadh. 

King Abdullah Economic City Special Economic Zone: Located in Makkah Al-Mukarramah zone with an area of 60 square kilometers, it targets the automotive supply chain and assembly, consumer goods, light electronic industries, pharmaceuticals, medical technologies, and logistics services.

Ras Al Khair Special Economic Zone: Located in the Eastern Province with an area of 20 square kilometers, it targets the shipbuilding, maintenance, repair and operation sectors, and floating drilling platforms, maintenance, repair, and operation sectors.

Jazan Economic Zone: Located in Jazan, with an area of 26 square kilometers, and targets the food processing, metal conversion, and logistics services sectors.

Investment incentives in the three zones mentioned above include:

First: 5% corporate income tax for 20 years.

Second: Permanently 0% withholding tax on repatriation of profits from the Special Economic Zone to foreign countries.

Third: 0% deferred customs duties on goods entering the special economic zones.

Fourth: Flexible and supportive regulations regarding foreign talent during the first five years.

Fifth: 0% value-added tax on all goods within the special economic zone exchanged within the zone and between zones.

Sixth: Exemption from operational fees for foreign employees and their families within the special economic zone. 

Cloud Computing and Informatics Special Economic Zone: Located in Riyadh, and data centers can be established and operated throughout the Kingdom of Saudi Arabia, targeting cloud computing services.

The Special Economic Zone for Cloud Computing and Informatics will contribute to achieving the targeted investments of $20 billion, through foreign direct investments and direct local investments in the data and artificial intelligence sectors by 2030.

Investing in the special economic zone for Cloud Computing and Informatics allows obtaining economic incentives that enhance business success, including:

- Special tax treatment in line with the principle of avoiding double taxation of the OECD and which is compatible with the operating model of cloud service providers.

- Exemption from operating fees for foreign employees and their families within the Special Economic Zone.

- An appropriate cost for connecting the network and providing electricity services, as the cost of electricity for companies is $0.05/kWh.

- Flexibility in providing cloud computing services from zone and the possibility of establishing and operating data centers throughout the Kingdom.

The Special Integrated Logistics and Industrial Zone in Riyadh: Located near King Khalid International Airport, in Riyadh, and targets consumer products, computer parts, medicines, food and medical supplies, the aerospace industry and spare parts sector, luxury goods, jewelry and precious metals.

The competitive advantages offered by zone are as follows:

- 0% corporate income tax.

- Tax exemptions for 50 years.

- Exemptions on VAT.

- Withholding tax exemptions, subject to meeting specified criteria.

- 0% VAT on services, manufacturing or assembly.

- Money transfer fees are tax exempt and subject to meeting specified standard.

- VAT exemptions for goods under customs duty suspension status.

The Kingdom of Saudi Arabia seeks to become a global investment power, and in light of Vision 2030; The social and economic transformation in the Kingdom is generating opportunities for growth in many promising sectors and zones.

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Reference/ citation

https://site.ecza.gov.sa/ar