In a pivotal step reflecting the accelerating pace of economic reforms in the Kingdom, the Saudi government has issued the regulatory framework for the special economic zones in Ras Al-Khair and King Abdullah Economic City. This move aims to solidify the Kingdom's position as a global investment destination, and the regulations will come into effect 90 days after their publication, bringing with them a package of unprecedented incentives.
Financial incentives and exceptional tax exemptions
Under the new regulations, the Kingdom is offering what can be described as a "golden opportunity" for investors, with incentives including extensive tax and customs exemptions. These benefits include a complete exemption from the Zakat and withholding tax system, as well as a zero percent value-added tax (VAT) rate on goods supplied between special economic zones and establishments operating within them. These flexible financial policies aim to reduce operating costs for multinational and local companies, thereby enhancing the competitiveness of Saudi products in global markets.
Flexible regulatory environment and investor protection
The regulations were not limited to financial aspects but also included a sophisticated legal framework for company formation. The new regulations allow companies to take the form of a "limited liability company," offering greater flexibility in registering branches and protecting trade names. The regulations also permit partnership agreements and family charters, providing a safe and stable environment for capital and guaranteeing investors' rights in accordance with international best practices.
Context of the vision and strategic importance
These initiatives fall within the objectives of Saudi Vision 2030, which aims to diversify national income sources and reduce dependence on oil. Special economic zones are of paramount strategic importance; Ras Al-Khair is a major industrial hub for mining and maritime industries, while King Abdullah Economic City serves as a vital logistics and industrial gateway on the Red Sea. Through these zones, Saudi Arabia seeks to transform into a global logistics center connecting three continents (Asia, Africa, and Europe), leveraging its unique geographical location.
Labor market regulation and oversight
In terms of human resources, the regulations stipulate balanced employment policies that consider the needs of investors and guarantee the rights of employees. Saudization quotas were determined based on the needs of each region, with a minimum wage set in accordance with national standards, and the principle of complete equality and non-discrimination among employees was emphasized. Regarding oversight, the Royal Commission for Jubail and Yanbu and Emaar Economic City clarified that inspection mechanisms will be conducted according to specific schedules and with high transparency, while guaranteeing the right to appeal before administrative courts, thus enhancing the private sector's confidence in the judicial environment of the regions.
Expected economic impact
These zones are expected to attract billions of riyals in foreign direct investment, transfer modern technologies to Saudi Arabia, and create thousands of high-quality jobs for Saudi youth. They will also enhance the integration of global supply chains, positioning the Kingdom among the leading countries in the field of free and economic zones in the Middle East and the world.
