Saudi Arabia has recently introduced a noteworthy tax update, which includes permanent tax exemptions for specific businesses within the country.
Mohammed Al Jadaan, the Minister of Finance, has confirmed that transactions between entities in special economic zones will be permanently exempt from value-added tax (VAT). Additionally, there will be a tax reduction in special economic zones for a duration of 20 years.
The announcements were made on the sidelines of the “Investment in Special Economic Zones” forum. During the forum, Al Jadaan highlighted that the Kingdom has achieved a remarkable feat. It is the only country to have obtained three positive ratings during 2023.
He said: “We will work to give a reduction in taxes for a period of 20 years so that investors can make long-term planning.”
“We will also provide permanent exemption for social insurance tax for the employer as well as for transactions between companies in special economic zones and between companies in different SEZs”.
Tax-free Economic zones
Saudi Arabia’s Crown Prince Mohammed bin Salman recently introduced the kingdom’s Special Economic Zones in April.
These zones have attracted considerable attention from investors. According to Arabian Business, they have already secured a total of $12.6 billion in investments. These investments span diverse industries such as maritime, mining, manufacturing, logistics, and technology.
Furthermore, the Saudi Economic Cities and Special Zones Authority (ECZA) has reported ongoing investments amounting to $31 billion.
Saudi has introduced four special economic zones with the aim of attracting increased foreign investment and establishing itself as a global business hub.
These zones, namely the King Abdullah Economic City SEZ, Jazan SEZ, Ras Al Khair SEZ, and Cloud Computing SEZ located in the King Abdulaziz City for Science and Technology, will provide companies with both financial and non-financial incentives.
The Saudi Arabia government has stated that these zones will primarily focus on key growth sectors such as advanced manufacturing, cloud computing, medical technology, and maritime.
