Governments compete for investment with tax holidays, zone regimes and grants, but most incentives now come with substance conditions and some are tied to market access. Saudi Arabia links regional headquarters status to tax relief and to eligibility for government contracts; the UAE gives qualifying free zone income a 0% rate; the UK and India use designated sites and financial centres. The value of an incentive depends on whether the business can meet the conditions for the full period.
Saudi Arabia's regional headquarters programme
A licensed regional headquarters pays 0% income tax on income from eligible activities and 0% withholding tax on qualifying payments to non-residents for a renewable 30 years from the licence date, provided it meets ZATCA's conditions and substance requirements; non-qualifying income is taxed at 20%. In return it must start its mandatory activities within six months, at least three optional activities within one year, and employ at least 15 full-time staff within one year. Substance failures carry a SAR 100,000 fine if not remedied within 90 days and SAR 400,000 for repeats, and incentives can be suspended.
The programme also has a procurement edge. Under regulations approved in December 2022, Saudi government agencies have been barred since 1 January 2024 from contracting with foreign companies that have no regional headquarters in the Kingdom, subject to a SAR 1 million threshold and listed exceptions. This rule is recorded here from a law-firm source only, so its current thresholds should be checked before relying on it.1234
Free zones, financial centres and designated sites
In the UAE a Qualifying Free Zone Person pays corporate tax at 0% on qualifying income and 9% on other taxable income, but only while it keeps adequate substance, earns qualifying income and meets transfer pricing rules. The DIFC and ADGM have their own common-law based company laws, so the federal Commercial Companies Law does not apply there. India gives units in an international financial services centre such as GIFT City a tax holiday for 20 of their first 25 years.
The UK uses designated sites: businesses can claim a 100% enhanced capital allowance on plant and machinery for use in Freeport or Investment Zone special tax sites, for spending until 30 September 2031 in English Freeports and 30 September 2034 in Scottish Green Freeports, Welsh Freeports and Investment Zones.5678
Discretionary and research incentives
Some incentives are negotiated rather than claimed. Singapore's Economic Development Board offers, among others, the Pioneer Certificate Incentive, the Development and Expansion Incentive (which also covers headquarters activities) and the Refundable Investment Credit, with terms set case by case. France's research tax credit is a statutory claim: 30% of eligible R&D spending up to EUR 100 million and 5% above, in metropolitan France.910
| Market | Programme | Benefit | Main condition | Source |
|---|---|---|---|---|
| Saudi Arabia | Regional headquarters (RHQ) | 0% income tax on eligible income and 0% WHT on qualifying payments for 30 years | 15 full-time staff within one year; substance rules | ZATCA RHQ guideline; MISA investor guide |
| UAE (free zones) | Qualifying Free Zone Person | 0% on qualifying income, 9% on other income | Substance, qualifying income, transfer pricing | Corporate Tax Law (MoF) |
| India (central) | IFSC units | Tax holiday for 20 of first 25 years | Not formed by splitting an existing business | PwC summary (secondary) |
| United Kingdom | Freeports and Investment Zones | 100% enhanced capital allowance | Asset used in designated tax site; spending deadlines 2031 or 2034 | GOV.UK |
| Singapore | EDB incentives | Concessionary rates or credits | Negotiated case by case | EDB |
| France | Research tax credit (CIR) | 30% of eligible R&D up to EUR 100 million, 5% above | Eligible R&D in metropolitan France | service-public.gouv.fr |
Decisions to make
- Will the business bid for Saudi government contracts above SAR 1 million?4Without a Saudi regional headquarters, a foreign group may be excluded unless an exception applies.
- Can the entity meet the staffing and activity conditions on time and keep them for the incentive period?235Saudi RHQs must reach 15 staff within a year and face fines and suspension for substance failures; UAE free zone status is lost for the whole period if a condition fails.
- Is the qualifying spending or activity inside the designated site or zone, and within the deadline?8UK site allowances apply only to assets used in designated sites and to spending before the statutory end dates.
- Is the incentive automatic or negotiated?9Discretionary incentives such as Singapore's EDB awards need to be agreed before the investment is committed.
Documents usually needed
- Regional headquarters licence application, with two certified commercial registrations and audited accounts
- Substance file: employment contracts, premises, board minutes and evidence of where decisions are taken
- Free zone licence and evidence supporting qualifying income
- Asset register showing use of plant and machinery within a designated site
- R&D project documentation and claim forms for research tax credits
Common mistakes
- Opening a regional headquarters as a shell without the required staff and activities
- Assuming all free zone income is taxed at 0% regardless of its source
- Claiming site allowances for assets mainly used outside the designated site
- Committing an investment before a discretionary incentive is agreed in writing
- Ignoring how a 0% incentive interacts with the 15% global minimum tax for large groups (see the tax centre)
Questions businesses ask
Can a foreign company without a Saudi RHQ still win Saudi government work?
Only in limited cases: contracts below SAR 1 million, work executed outside the Kingdom, or listed exceptions such as a single acceptable offer. This rule is recorded from a secondary source and should be confirmed.4
Is all income of a UAE free zone company taxed at 0%?
No. Only qualifying income of a Qualifying Free Zone Person is taxed at 0%; other taxable income is taxed at 9%, and the status depends on substance and other conditions.5
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- India's Special Economic Zones Act regime was not confirmed on an official page and is not covered.
- The Saudi rule on government contracting with non-RHQ companies is recorded from a 2023 secondary source; no official text was found.
- Saudi special economic zones, US federal and state incentives and German investment grants were not researched.
- How each incentive is affected by Pillar Two top-up taxes is outside this module; see the tax centre.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
A licensed regional headquarters pays 0% income tax on income from eligible activities and 0% withholding tax on qualifying payments to non-residents for a renewable period of 30 years from the licence date. RHQ licensed by the Ministry of Investment that meets ZATCA's conditions and economic substance requirements; non-qualifying income is taxed at 20%.
The 16 February 2024 effective date of the RHQ tax rules comes from PwC Worldwide Tax Summaries (Significant developments).
A regional headquarters must start its mandatory activities within six months of its licence, start at least three optional activities within one year, and employ at least 15 full-time employees within one year. Regional headquarters registered with the Ministry of Investment.
Regional headquarters economic substance violations carry a SAR 100,000 fine if not remedied within 90 days and SAR 400,000 for repeat violations, and incentives may be suspended. Licensed RHQs claiming tax incentives.
Under regulations approved by the Council of Ministers on 27 December 2022, Saudi government agencies may not contract with foreign companies that have no regional headquarters in Saudi Arabia, or with their related parties, from 1 January 2024. Applies to all government agencies, not only those under the Government Tenders and Procurement Law. Does not apply to works or procurements estimated below SAR 1 million or executed outside the Kingdom. Exceptions include a single technically acceptable offer, a best technical offer priced at least 25% below the next, emergencies, and work only non-RHQ companies can perform; the agency must report its reasons to the General Auditing Bureau and the Expenditure and Project Efficiency Authority within 30 business days of signing.
Secondary source (law-firm briefing, January 2023). No official Saudi page stating the contracting rule was found; the Ministry of Investment investor guide (2026) describes the RHQ licence but not the contracting restriction. Thresholds and exceptions may have been revised since.
A Qualifying Free Zone Person pays corporate tax at 0% on qualifying income and 9% on other taxable income, provided it keeps adequate substance, earns qualifying income, has not elected to be taxed at standard rates and meets transfer pricing requirements. Free zone persons only (mainland entities cannot use this regime). Failing any condition removes the status from the start of that tax period. The incentive period may be extended but cannot exceed 50 years. Detailed qualifying activities and de minimis rules are in Cabinet and Ministerial Decisions not reviewed here.
The DIFC and ADGM have their own company laws based on English common law principles, so the federal Commercial Companies Law does not apply to companies incorporated there; non-financial free zones are subject to federal law plus their own regulations, and may exclude the Commercial Companies Law. ADGM applies English common law directly; the DIFC uses a common-law-based framework. Free zone rules vary by zone (for example Jafza excludes the Commercial Companies Law, but its registrar may apply some provisions where Jafza's own regulations are silent).
Secondary source. DIFC and ADGM official pages could not yet be checked.
Units in an international financial services centre have a tax holiday for 20 of their first 25 years, and offshore banking units for 20 years, followed by a 15% concessional rate, excluding units formed by splitting or restructuring an existing Indian business. IFSC units (for example at GIFT City), as extended by the Finance Act, 2026. Central tax incentive.
Secondary source (last reviewed 11 May 2026).
Businesses can claim a 100% enhanced capital allowance on qualifying plant and machinery for use in Freeport or Investment Zone special tax sites, for spending until 30 September 2031 in English Freeports and 30 September 2034 in Scottish Green Freeports, Welsh Freeports and Investment Zones. Only from the date the site is designated. Other site reliefs (structures and buildings allowance, employer National Insurance, Stamp Duty Land Tax in England, business rates) have their own conditions.
The Economic Development Board's incentives include the Refundable Investment Credit, the Pioneer Certificate Incentive, the Development and Expansion Incentive (which also covers headquarters activities), the Finance and Treasury Centre Incentive and the Intellectual Property Development Incentive. Tax incentives rest on the Economic Expansion Incentives Act and the Income Tax Act; award criteria and concessionary rates are set case by case and were not confirmed.
The research tax credit (crédit d'impôt recherche, CIR) is 30% of eligible R&D expenditure up to EUR 100 million and 5% above, in metropolitan France. 50% up to EUR 100 million in the overseas departments. Available to industrial, commercial and agricultural businesses taxed under a real regime. Claimed on form 2069-A-SD; unused credit is set against tax for the next 3 years and then refunded.
Page last verified 21 February 2025; changes made by the finance law for 2026 were not checked.
Questions on this topic
10 statements on incentives, special zones and the saudi rhq programme
