Special Economic Zones in Saudi Arabia

As part of Vision 2030, Saudi Arabia has established its first four special economic zones with distinct commercial regulations tailored to meet the objectives of free trade zones and serve the goals of global investors. These zones also aim to facilitate economic diversification, stimulate economic growth, and enable foreign investors to engage in business activities in Saudi Arabia in a way that aligns with the national vision and supports investor goals within the Saudi market. 

These economic zones offer incentives across various sectors, including industrial, commercial, import, and export activities. They provide significant support for investors by facilitating the acceleration of their operations both internationally and locally, connecting them to global and local markets.

The economic zones launched are: 

1.The Special Economic Zone in King Abdullah Economic City (KAEC). 
2.The Special Economic Zone in Ras Al Khair. 
3.The Special Economic Zone in Jazan. 
4.The Special Economic Zone for Cloud Computing and Information Technology in King Abdulaziz City for Science and Technology (KACST). 
5.The Integrated Logistics Special Zone in Riyadh.

Special Economic Zone in King Abdullah Economic City:
Located in Makkah Region, covering an area of 60 square kilometers. This zone targets the automotive supply chain and assembly, consumer goods, light electronics, pharmaceuticals, medical technologies and logistics services.

Special Economic Zone in Ras Al Khair:
Located in the Eastern Region, covering an area of 20 square kilometers. This zone targets the shipbuilding, maintenance, repair, and operation sectors, as well as floating drilling platforms and related maintenance, repair, and operation activities.

Special Economic Zone in Jazan:
Located in Jazan, covering an area of 26 square kilometers. This zone targets food processing, metal processing, and logistics services.

Investment Incentives in the Above-Mentioned Zones:
1.5% Corporate Income Tax for a period of 20 years.
2.0% Withholding Tax on the repatriation of profits from the special economic zone to foreign countries, permanently.
3.0% Deferred Customs Duties on goods entering the special economic zones.
4.Flexible and Supportive Regulations concerning foreign talents during the first five years.
5.0% Value-Added Tax on all goods exchanged within the economic zone and between zones.
6.Exemption from Operational Fees for foreign employees and their families within the special economic zone.

Special Economic Zone for Cloud Computing and Information Technology:
Located in Riyadh, this zone allows for the establishment and operation of data centers across Saudi Arabia. It primarily targets cloud computing services.
The Special Economic Zone for Cloud Computing and Information Technology contributes to achieving the targeted investments of $20 billion through both direct foreign and local investments in the data and artificial intelligence sectors by 2030.
Investing in the Special Economic Zone for Cloud Computing and Information Technology offers economic incentives that enhance business success, including:

• A special tax treatment in line with the OECD’s principle of avoiding double taxation, which aligns with the operational model of cloud service providers.
• Exemption from operational fees for foreign employees and their families within the special economic zone.
• Affordable network connection and electricity services, with electricity costs for companies at $0.05 per kWh.
• Flexibility in providing cloud computing services from the zone, with the option to establish and operate data centers across the Kingdom.

Integrated Industrial and Logistics Special Economic Zone in Riyadh:
Located near King Khalid International Airport in Riyadh, this zone targets consumer products, computer components, pharmaceuticals, food and medical supplies, aerospace and spare parts, luxury goods, jewelry, and precious metals.
The competitive advantages offered by the zone include:

• 0% Corporate Income Tax.
• 50-year tax exemptions.
• Exemptions from Value-Added Tax (VAT).
• Exemptions from withholding tax, subject to meeting specified criteria.
• 0% VAT on services, manufacturing, or assembly.
• Exemptions from money transfer fees, subject to meeting specified criteria.
• VAT exemptions on goods under customs duty suspension.

Saudi Arabia is striving to become a global investment powerhouse, and under Vision 2030, the country’s social and economic transformation is generating growth opportunities across various promising sectors and regions.

The Special Economic Zones Network:

The special economic zones network in Saudi Arabia offers investors an abundance of untapped opportunities for business growth and success. These exceptional and competitive locations provide a wealth of prospects for investors in the Kingdom. Below is an overview of the Kingdom's economy:

Economic Indicators in 2022: