Special Economic Zones in Saudi Arabia: Comprehensive Overview and Key Benefits
Saudi Arabia has so far launched five Special Economic Zones (SEZs), created to attract foreign investment and stimulate business expansion.
The Kingdom is set to unveil many more as it advances toward achieving Vision 2030.
SEZs are particularly important for foreign companies setting up a business in Saudi Arabia, as they offer a wide range of benefits that make it easier and more scalable for international businesses to establish and grow their operations in the Kingdom.
In 2023, Saudi Arabia announced new social economic zones, each focusing on specific sectors:
- King Abdullah Economic City (KAEC) focuses on advanced manufacturing and logistics.
- Jazan SEZ acts as a trade gateway to Africa and Asia, supporting industrial and food processing activities.
- Ras Al-Khair SEZ focuses on shipbuilding and repair as a maritime hub.
- Cloud Computing SEZ focuses on digital innovation and cloud technologies.
- The Riyadh Integrated Special Logistics Zone focuses on logistics and cargo capacity.
Benefits of Special Economic Zones for Foreign Companies Expanding to Saudi Arabia
Businesses operating in Saudi Arabia's Special Economic Zones (SEZs) can benefit from a variety of incentives, including:
- Competitive corporate tax rates
- Customs duties exemption
- 100% foreign ownership
- Flexible employment regulations
- Streamlined business setup procedures
- Sector-specific incentives
Tax incentives offered to businesses across SEZs include:
- A 5% corporate income tax rate for up to twenty years
- 0% withholding tax on profit repatriation from the SEZ to foreign countries
- Customs duties deferral for goods within the SEZ or zero customs duties on capital equipment and inputs within the Special Economic Zones
How Special Economic Zones Are Creating a Robust Infrastructure for Foreign Businesses in Saudi Arabia
The special economic zones are fulfilling the need for offices in Saudi Arabia. They are strategically placed to maximize connectivity and accessibility and boast world-class infrastructure, giving businesses access to modern, high-quality office spaces that meet international standards. Every SEZ is equipped with state-of-the-art facilities that cater to various business needs, including advanced technology setups, co-working spaces, and customizable office environments.
In such a conducive business environment, businesses of all sizes can find office spaces that suit their specific requirements, minimizing the logistical and operational challenges.
Moreover, since SEZs offer many benefits, including tax benefits and exemptions from customs duties, they reduce businesses' operational costs. This makes it financially viable for foreign companies setting up a business in Saudi Arabia and maintain office spaces within these business zones.
The flexibility in hiring foreign talent and the streamlined business setup processes further support foreign companies in establishing their offices quickly and efficiently.
The rollout of more Saudi economic zones will increase the inflow of foreign companies and investments into the country and contribute significantly to the country’s economic growth and diversification, making Saudi Arabia an attractive destination for private businesses.
International companies across diverse sectors are already capitalizing on the benefits offered by these zones. Unipart, a UK-based logistics leader recently setup their operations in Integrated Logistic Bonded Zone Riyadh,
With a team of 30 on-ground specialists, AstroLabs offers end-to-end support, handling various aspects of the Saudi market expansion for foreign companies while fostering key interactions with public and private agencies, as well as increasing awareness of SEZs and how to best utilize them to ensure long-term success.
The Logistic Sector Through the Lens of SEZs
The logistics sector in Saudi Arabia is expected to become one of the Kingdom’s most important drivers of economic growth. Currently, it contributes 6% to the country’s GDP, with estimations that the number will increase to 10% by 2030, translating to approximately SAR 20.1 billion ($5.36 billion) annually.
To meet those expectations, the country plans to launch 59 logistics zones by 2030, of which 21 are already operational. The Special Integrated Logistics Zone at King Khalid International Airport in Riyadh spans 3 million square meters and is designed to serve markets in Africa, Asia, and Europe efficiently.
One of the most lucrative opportunities in the logistics sector stems from Saudi Arabia’s desire to modernize the sector with new technologies. This includes substantial investments in digital infrastructure and smart logistics solutions.
With the Kingdom seeking to solidify its status among the top 15 global economies by 2030, SEZs will be a pivotal driver of economic growth and business expansion activity by accelerating sector-specific innovation and industrial development.
