Riyadh is Saudi Arabia's capital and the home of the Royal Commission for Riyadh City, one of the two bodies behind the Regional Headquarters programme. For an Indian company that already sells into the Gulf (GCC), it is a natural base to consider. It is also the market where one policy, the Regional Headquarters rule, changes who can win government work.
This guide is about Riyadh specifically: what the Regional Headquarters (RHQ) programme is and who it applies to, why it matters for government procurement, which setup option fits which company, how to hire under Saudization rules, and what to do in the first 6 to 12 months. For the registration mechanics, from activity codes to ZATCA, read our Saudi Arabia company registration guide. For the regional comparison and indicative costs, see our Gulf company formation white paper.
This is general guidance, not legal or tax advice. Confirm the current rules with the Ministry of Investment (MISA), ZATCA or a licensed adviser before you commit.
Why Riyadh, and what changed
In February 2021, the Saudi Press Agency reported that the Kingdom would stop contracting with companies and commercial institutions whose regional headquarters were not in Saudi Arabia, covering government agencies, institutions and funds, from 1 January 2024. The announcement tied the directive to the Riyadh 2030 strategy and noted that 24 international companies had announced plans to move their regional headquarters to Riyadh. It also said the decision would not affect any investor's ability to enter the Saudi market or to keep doing business with the private sector.
The RHQ programme puts this policy into practice. It is a joint initiative of MISA and the Royal Commission for Riyadh City, first launched in 2021. In December 2023, the government added a 30-year tax incentive, and by then the programme had licensed more than 200 companies. In February 2024, the Ministry of Commerce announced online services for RHQs, including registering an RHQ as a branch of a foreign company or as a foreign company.
What is a regional headquarters?
ZATCA's guideline defines an RHQ as the regional headquarters of a multinational group, set up under Saudi law to support, manage and give strategic direction to the group's branches, subsidiaries and related companies in the Middle East and North Africa.
An RHQ must carry out mandatory activities for its affiliates in two groups:
- Strategic direction: developing and monitoring the regional strategy, coordinating strategic fit, supporting acquisitions and divestments, and reviewing financial performance.
- Management: business plans, budgeting, business coordination, identifying new market opportunities, monitoring the regional market and competitors, regional marketing plans, and operational and financial reporting.
Within one year of its licence, it must also carry out at least three optional activities from a list that includes sales and marketing support, human resources, training, treasury services, accounting, legal, audit, consulting, IT, research and development, logistics and supply chain management, and sourcing.
What an RHQ cannot do is just as important. MISA's investor guide says the RHQ shall not directly conduct revenue-generating commercial operations other than its licensed RHQ activities. ZATCA adds that all commercial activities must be carried out by related companies holding the necessary commercial licences.
What does the RHQ get?
- Tax: for a renewable 30 years from the licence date, 0% income tax on eligible income from eligible activities, and 0% withholding tax on dividends, payments to related persons and payments to unrelated persons for services the RHQ needs. Income from other activities is taxed at the standard 20%.
- Other incentives: when the tax package was announced, the Minister of Investment pointed to relaxed Saudization requirements and work permits for the spouses of RHQ executives.
Who does the RHQ programme apply to?
According to ZATCA's guideline, a group qualifies when it meets all of these criteria:
- It owns at least two subsidiaries or branches outside both Saudi Arabia and its headquarters country.
- The applicant has a commercial registration in its headquarters country, plus registrations for at least two affiliated entities in two different countries, all attested by the Saudi embassy.
- It submits audited financial statements for the last financial year.
- The RHQ is registered in Saudi Arabia as a company or a branch, independent of the group's other Saudi entities.
Then come the substance and staffing obligations. MISA's investor guide requires the RHQ to start its mandatory activities within six months, start at least three optional activities within one year, and employ at least 15 full-time staff on RHQ activities within one year, including at least three at executive director or vice-president level. ZATCA's economic substance rules require a physical office in Saudi Arabia, owned or leased and proportionate to the RHQ's activities, with the RHQ directed and managed in the Kingdom, board meetings held physically there, and minutes and records kept there.
| Your situation | Does the RHQ route fit? |
|---|---|
| Indian company, no subsidiaries outside India yet | No. It does not meet the two-country test. Start with a standard company. |
| Indian group with subsidiaries in, say, the UAE and the UK, managing the region from Dubai | Possibly, if Saudi government work is a priority and you can staff 15 people in year one. |
| Group selling only to Saudi private sector clients | Usually not needed. The 2021 announcement said private sector business is not affected. |
Government procurement: when the RHQ rule matters
If Saudi ministries, government agencies or state funds are your target customers, the RHQ question comes early. The rule targets companies whose regional headquarters is outside the Kingdom. Two practical points follow.
First, an RHQ on its own does not sell. It manages and supports. The contract itself is delivered by a licensed operating company, so a government-focused entry usually means two entities: the RHQ and an operating company registered with MISA.
Second, MISA has a temporary registration for foreign companies that have already obtained a government or semi-government contract. It lasts for the duration of that contract and ends with it. It suits a company that has won a specific contract, not one building a long-term presence.
Implementing regulations decide whether a given contract is covered, so before you commit bid resources, ask the procuring entity whether the RHQ rule applies to that tender.
Practical setup choices in Riyadh
| Option | Use it when | Points to note |
|---|---|---|
| Company under a MISA investment registration | You will sell to private sector clients, or you are a first-time entrant | MISA estimates 10 working days to register; the Ministry of Commerce lists 72 hours to incorporate |
| RHQ plus an operating company | Your group manages the region from Saudi Arabia and wants government work | RHQ cannot earn commercial revenue; budget for 15 staff in year one |
| Temporary registration for a government contract | You already hold a government contract | Ends when the contract ends |
| Scientific and technical office | You sell through a Saudi agent or distributor and need technical support on the ground | May not sign contracts or carry out commercial activity |
When we checked the Ministry of Commerce's page for establishing a company under an investment licence on 7 October 2026, it listed commercial registration fees of SAR 1,200 for a limited liability company and SAR 1,600 for a joint-stock or simplified joint-stock company, plus a SAR 500 publication fee and 15% VAT.
MISA's One-Stop Shop centres, including one in Riyadh, bring services from the ministries of justice, human resources, interior and foreign affairs and from social insurance under one roof. They are useful when an online service fails.
Hiring and Saudization in Riyadh
Nitaqat
Every Saudi entity is placed in a Nitaqat range, from Red to Platinum, based on its Saudization rate, its economic activity and its size. Under HRSD's guideline, Low Green entities cannot apply for new expatriate visas, and Red entities cannot renew existing work permits. Hire Saudi staff from the start, not after the expatriate team is in place. Our registration guide explains the ranges.
Profession-specific quotas
Some professions have their own targets. HRSD's procedural manual for technical engineering professions, issued under a ministerial resolution of 26 January 2025, sets a Saudization target of 30% for private sector establishments with five or more workers in the listed professions, such as surveyors, draftsmen and engineering technicians. The manual describes the rate rising gradually, with enforcement starting on 27 July 2025 after a six-month grace period. A Saudi technician counts only with a social insurance contributory wage of at least SAR 5,000 and accreditation from the Saudi Council of Engineers. Engineering and project firms should check the occupation list before they plan their Riyadh team.
Work visas for your Indian team
MISA's RHQ portal sets out the usual work visa route. The Saudi employer applies for the work visa with the labour ministry, the Ministry of Foreign Affairs issues a visa authorisation number, and the employee applies with supporting documents. These include a degree certified and authenticated in the home country or by the Saudi Arabian Cultural Mission and embassy, a recent police report, an employment contract certified by the Ministry of Foreign Affairs and the Saudi Chamber, and a recent medical report. Start degree attestation for your first transferees early.
For the general manager, MISA's investor guide notes that a residence permit needs a commercial registration showing the general manager's name, an electronic work permit from HRSD, a medical report and health insurance.
Tax points for a Riyadh entity
- An operating company owned by an Indian parent pays income tax at 20% on its tax base; see our registration guide for zakat and VAT.
- ZATCA's guidance gives 120 days from the end of the tax year to file the income tax return.
- Management fees, royalties and other charges between the Riyadh entity and the Indian parent are related-party transactions, which fall under ZATCA's transfer pricing bylaws. Price them at arm's length and keep documentation.
- India and Saudi Arabia have a double taxation avoidance convention, signed on 25 January 2006 and in force since 1 November 2006. ZATCA's guideline notes that where a treaty conflicts with local law, the treaty applies first, except for anti-avoidance provisions.
Your first 6 to 12 months in Riyadh
| Period | What to do |
|---|---|
| Months 0 to 1 | Decide the entity and activity codes. Attest Indian documents with the Saudi embassy. Use business visit visas for scouting: MISA lists an invitation from the Saudi Chamber and a passport valid for six months, with 1 to 3 working days to process. |
| Months 1 to 3 | Register with MISA, incorporate, and confirm your ZATCA registration, which happens on incorporation. Open the bank account. If you expect taxable supplies above SAR 375,000 in the next 12 months, register for VAT now. |
| Months 2 to 4 | Lease an office, process the general manager's residence permit, and make the first Saudi hire to protect your Nitaqat range. Set up e-invoicing compliant accounting. |
| Months 4 to 6 | Win and deliver the first contracts through the operating company, and track taxable supplies against the VAT threshold. For an RHQ, start the mandatory activities by month six. |
| Months 6 to 12 | For an RHQ, start three optional activities and reach 15 full-time staff by month twelve. Complete MISA's annual update, prepare the first-year accounts and the 120-day tax return, and review your Nitaqat range every quarter. |
Measure the expansion on commercial outcomes too: qualified Riyadh pipeline, first signed client, and the cost of the entity against the revenue it supports. Setup is the easy part; first revenue is the hard part.
Common mistakes to avoid
- Setting up an RHQ when you only sell to private sector clients, or when the group cannot meet the two-country test.
- Expecting the RHQ to invoice customers. It cannot earn ordinary commercial revenue.
- Missing the six-month and twelve-month RHQ deadlines.
- Building an all-expatriate team and losing access to new visas.
- Leaving degree attestation until after the job offer.
- Charging management fees to Riyadh without transfer pricing support.
Where Riyadh fits in your Gulf plan
If Riyadh is one part of a wider Gulf plan, see our guides to company setup in Qatar for Indian businesses and UAE free zone versus mainland, and the Gulf company formation white paper.
How Stratisian can help
Stratisian is an execution-led management consulting firm for owner-led businesses in India and the Gulf, based in Noida and serving the UAE, Saudi Arabia and Qatar. Our market entry service takes a business from the entry decision to its first clients in the new market: feasibility, entity structure and setup, compliance, local hiring and go-to-market. We work alongside your leadership team and your legal and tax advisers. See what the market entry service covers, and read our India-Gulf corridor guide.
Every engagement starts with a diagnostic from ₹10,000 + GST (India) or $100 (overseas clients). Execution engagements are priced at 1% of topline revenue, billed monthly (conditions apply). Scope, duration and final commercials are agreed in writing after the diagnostic. Details are on our pricing page.