Overview

Saudi Arabia has experienced a rapid and remarkable transformation over the years. The Kingdom has taken numerous strategic and economic initiatives, tirelessly working towards establishing itself as a top investment destination for global investors. By 2030, Saudi Arabia aims to be among the top 15 global economies and is making significant efforts towards achieving this goal.

The Kingdom opened its first integrated Special Economic Zone in Riyadh in October 2022, citing Apple among the first high-profile tenants.

Learn more about First Special Economic Zone- Integrated Logistics Zone.

The economic zones’ appeal is further enhanced by Saudi Arabia’s favourable geographic location, which provides access to over 70% of the world’s population within eight hours, as well as the Kingdom’s young, educated population of over 36 million, vast natural resources, and thriving, stable capital markets. The strategic location of Saudi Arabia, situated at the centre of key trade routes and supply chains, gives the economic zones added appeal.

What are Special Economic Zones?

Special Economic Zones (SEZs) are designated areas that offer unique advantages to businesses, such as tax incentives, streamlined regulations, and access to world-class infrastructure. These zones promote economic growth, investment, and job creation by providing a favorable environment for companies.

New Special Economic Zones in Saudi Arabia

Saudi Arabia has recently established four special economic zones that will provide companies with various financial and non-financial benefits, such as less corporate tax rates, 100% foreign ownership, duty-free machinery and raw materials imports, simplified setup procedures, and flexibility in hiring foreign labour.

The special economic zones recently launched by Saudi Arabia will concentrate on advanced manufacturing, cloud computing, medical technology, and maritime industries, providing foreign investors an opportunity to invest in the world’s fastest-growing economy.

The four new economic zones in Saudi Arabia are:

• King Abdullah Economic City SEZ
• Jazan SEZ
• Ras Al Khair SEZ
• Cloud Computing SEZ

Regulatory Authority for Special Economic Zones

The Economic Cities and Special Zones Authority (ECZA) is responsible for establishing and regulating special economic zones and providing single-window government services to investors and residents.

Commercial Incentives Offered by Special Economic Zones

All special economic zones will offer the same commercial incentives to businesses.

• A 5% Corporate Income Tax rate is applicable for up to twenty years
• 0% withholding tax on profit repatriation from special economic zones to foreign countries
• Customs duties deferral for goods within SEZ or zero Custom duties on capital equipment and inputs within SEZ
• Flexible and supportive regulations for foreign talent during the first five years
• Zero VAT for all intra-SEZ goods exchanged within and between the SEZs
• Special tax treatment aligned with OECD principles to prevent double taxation
• Competitive utilities rates, particularly for electricity
• Exemption from operational fees for employees and their families within SEZ

King Abdullah Economic City (KAEC) SEZ

The KAEC SZ provides exceptional connectivity to global trade routes through King Abdullah Port and the Red Sea, responsible for 13% of the world’s trade, allowing companies to easily tap into global supply chains. Moreover, the existing world-class infrastructure and the world’s most efficient port make it effortless for companies to access these trade routes.

Location and Size of the Zone

The King Abdullah Economic City SEZ is situated on the Red Sea, less than an hour and a half’s drive from Jeddah Airport. The size of KAEC SZ is 60 km².

Focused Sectors of Opportunity

• Automobile supply chain and assembly
• Consumer goods
• ICT (Electronic light manufacturing)
• Pharmaceutical
• MedTech
• Logistics

Benefits of King Abdullah Economic City SEZ (Source: ECZA)

• Abundant electrical supply including over 29GWH of clean power annually
• Potable and process water supply, with distribution at a 1.5 bar minimum
• The gas zone will supply investors with natural gas at a significant cost advantage
• Comprehensive portfolio of telecoms services with a state-of-the-art fibre network
• Reliable sewage networks, including a membrane bio-reactor plant

Ras Al-Khair SEZ

Situated in the heart of the Arabian Gulf, the Ras Al-Khair SEZ provides an abundant supply of industrial talent and a quick, efficient multimodal transport system that connects businesses to global markets. The SEZ is a fully integrated marine ecosystem with a rich network of existing investors, with 40% of the Zone already reserved.

Location

Ras Al-Khair SEZ is located 100km from the vibrant city of Jubail in the Eastern province. Its size is 20km².

Focused Sectors of Opportunity

• Shipbuilding and MRO
• Rig platforms and MRO

Benefits of Ras Al-Khair SEZ (Source: ECZA)

• Access internationally competitive prices
• Take advantage of innovative lifecycle management offerings
• Access state-of-the-art technologies, including AI, Biometrics and IOT
• Enjoy green products and materials, as well as renewable energy sources
• Benefit from green products, materials, and renewable energy sources

Jazan SEZ

Located in the Kingdom’s fertile southwestern region, Jazan SEZ offers access to the largest regional port for exporting goods and importing materials. Investors can benefit from and contribute to large-scale infrastructure projects in Saudi Arabia and worldwide by easily accessing natural and industrial resources. Jazan’s unique position on the Red Sea shipping route and its accessibility to growing African markets make it an ideal platform for investment.

Location

Jazan SEZ is located in Jazan province, having a size of 24.6 km2.

Focused Sectors of Opportunity

• Food Processing
• Metal Conversion
• Logistics

Benefits of Jazan SEZ (Source: ECZA)

• A large and highly skilled force
• Highly competitive industrial leases
• A range of cheap and efficient water supply options across irrigation, potable water and sanitary wastewater
• Cost-effective energy, including 2.4GW in output from the Aramco power plant

Cloud Computing SEZ

Cloud Computing SEZ is Saudi Arabia’s own ‘Silicon Valley’, being a home for emerging and disruptive digital technologies.

The Cloud Computing SEZ clearly expresses the Kingdom’s ‘Cloud First’ policy and its unwavering dedication to digital innovation and the rapidly expanding tech sector. This SEZ offers an innovative hybrid model that enables investors to establish physical data centres and cloud computing infrastructure in multiple locations throughout the Kingdom.

Location

The Computing SEZ is located in Riyadh at the Innovation Tower in King Abdulaziz City for Science and Technology.

Focused Sectors of Opportunity

• Cloud Computing Services

Benefits of Cloud Computing SEZ (Source: ECZA)

• Special tax treatment in line with OECD principles to avoid double taxation and accommodates CSPs operating model
• Electricity is available at a competitive rate of 0.05 USD/kWh for businesses
• Exemption from applicable fees on expats and families
• Flexibility to provide cloud computing services from SEZ, with the ability to build and operate data centres from all over the Kingdom

Al Taasis is Your Forever Business Partner

Al Taasis stays ahead of the curve and brings up-to-date information to help you scale your business in the right jurisdiction. Our expert team can make your incorporation process convenient with our exceptional business setup service. With our insightful assistance, you can make informed decisions about your business expansion to Saudi Arabia.

Contact us to know more about the prerequisites of your business journey.