Regulations on Special Economic Zones in Saudi Arabia
Tax Alert
3 February 2026
3 February 2026
The government of Saudi Arabia has approved regulatory frameworks (Regulations) for designated special economic zones (SEZs) established under the Vision 2030 strategy.
The new Regulations coming into force in April 2026 outline the requirements to potential SEZ residents and incentive packages offered. After the Regulations are implemented, businesses operating in the SEZs will have 90 days to align their corporate structures with the new framework.
The Regulations follow the same structure and establish similar rules and incentives.
From a tax perspective, the Regulations provide that licensed SEZ residents will be subject to corporate income tax while being exempt from zakat.
KAEC, Jazan and Ras Al Khair SEZs offer withholding tax exemptions, which will be available to holders of a valid license of the respective SEZ and only with respect to payments related to licensed activities.
Companies within KAEC, Jazan and Ras Al Khair SEZs will also benefit from preferential VAT and customs treatment:
The Regulations follow the same structure and establish similar rules and incentives.
From a tax perspective, the Regulations provide that licensed SEZ residents will be subject to corporate income tax while being exempt from zakat.
KAEC, Jazan and Ras Al Khair SEZs offer withholding tax exemptions, which will be available to holders of a valid license of the respective SEZ and only with respect to payments related to licensed activities.
Companies within KAEC, Jazan and Ras Al Khair SEZs will also benefit from preferential VAT and customs treatment:
In their current version, the Regulations do not extend VAT benefits to services.
- 0% VAT on goods supplied from other KSA regions, exchanged within the same SEZ or between licensed entities in different SEZs, subject to compliance with special provisions of customs law. The relief only applies to goods connected to licensed activities of a SEZ resident.
- Treatment of certain goods imported into SEZs as outside the scope of VAT
- Deferral of customs duties on goods brought in by a licensed company and connected with its activities, provided that they are placed under one of the special regimes under the Unified Customs Law
Each SEZ will issue additional guidance on the application of benefits and exemptions.
Relations between SEZ residents and their employees will be regulated by labor rules and special Saudization requirements tailored specifically for SEZs. The requirements and procedures for the issuance of licenses and permits to operate within SEZs will also be governed by internal regulatory frameworks. Note that entities must be incorporated only as a Saudi limited liability company (LLC) founded by one or several members.
It is also important to note that, in addition to benefits and exemptions, the Regulations establish penalties for non-compliance.
In addition to the Regulations, several other initiatives were launched under Vision 2030: the Kingdom of Saudi Arabia offers a tax relief package to regional headquarters of international companies, alongside the right for foreigners to purchase real estate and access its capital market from 2026. These changes are designed to attract foreign investment and boost non-oil sectors.
Relations between SEZ residents and their employees will be regulated by labor rules and special Saudization requirements tailored specifically for SEZs. The requirements and procedures for the issuance of licenses and permits to operate within SEZs will also be governed by internal regulatory frameworks. Note that entities must be incorporated only as a Saudi limited liability company (LLC) founded by one or several members.
It is also important to note that, in addition to benefits and exemptions, the Regulations establish penalties for non-compliance.
In addition to the Regulations, several other initiatives were launched under Vision 2030: the Kingdom of Saudi Arabia offers a tax relief package to regional headquarters of international companies, alongside the right for foreigners to purchase real estate and access its capital market from 2026. These changes are designed to attract foreign investment and boost non-oil sectors.
How we can help
- Assess the tax implications of doing business in Saudi Arabia
- Advise on the optimal structures in Saudi Arabia, as compared with alternative jurisdictions in the region and globally
- Develop strategies to mitigate tax risks arising from transfer pricing across different jurisdictions
- Assist with matters related to the application of double tax treaties
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