Saudi Arabia: New special economic zones to be established in Saudi Arabia

To accelerate the economic diversification and create a new route for investors to do business in the Kingdom, on 13 April 2023 the KSA government announced the launch of new Special Economic Zones (SEZ) in Saudi Arabia.  

Following the announcement, the KSA Economic Cities and Special Zones Authority

(ECZA) ‘the regulator of KSA’s Economic Cities (ECs) and SEZs (Special Economic Zones)’ published a brochure including an overview for the offered tax incentives and reliefs as well as other non-tax incentives provided to the newly announced economic zones in KSA.  

The brochure includes the following tax incentives for the SEZs:

• 5% corporate income tax for up to 20 years
• 0% unlimited withholding tax for the repatriation of profits from SEZ to foreign
• countries
• 0% customs duties deferral for goods inside the SEZ (for Jazan – only on capital
• equipment and inputs)
• 0% VAT for all intra-SEZ goods exchanged within and between zones

Value-added tax reliefs:

• Goods imported into SEZ from outside KSA are treated as outside the VAT scope  
• Zero-rated VAT should be applicable on all intra-SEZ goods exchanged within the zone and between zones  

The brochure outlined other non-tax incentives such as granting flexible and supportive regulations regarding expats’ employment during the first five years.

The new Special Economic Zones launched today will significantly impact how business is carried out in the country as well as have a major impact on the KSA tax regime.

In this regard, we expect further guidance and regulations relating to the various SEZs to be announced in the coming months to formalise incentives and reliefs announced by ECZA.