Economic Zones in Saudi Arabia

Company formation in Saudi Arabia is increasing in popularity as it offers opportunities across multuple growing industries and sectors. These new economic zones, which are in development, are expacted to further the attraction of the Kingdom buy offering additional jurisdictions to benefit establishing businesses.

Saudi Arabia is proactively reshaping its economic infrastructure through the introduction of five new Special Economic Zones (SEZs), strategically positioned across the country. These zones are pivotal to the Kingdom's Vision 2030 agenda, which aims to diversify the economy and bolster private sector growth through significant economic reforms. By fostering a competitive investment environment, these SEZs are set to enhance Saudi Arabia's appeal to global investors by offering attractive incentives.

The SEZs, including King Abdullah Economic City (KAEC), Ras Al-Khair Special Economic Zone, Jazan Economic City (JEC), Special Integrated Logistics Zone (SILZ), and a zone dedicated to cloud computing, are in various stages of development. They promise to position Saudi Arabia as a key player in the regional economy, ready to compete with other free zones in the GCC.

King Abdullah Economic City (KAEC)

Located strategically within the Makkah Province, King Abdullah Economic City (KAEC) SEZ spans 60 square kilometres and is optimally positioned at the Red Sea's heart. This prime location not only facilitates easy access to African markets but also connects seamlessly to global supply chains through its proximity to major transportation hubs. Less than 90 minutes from both the bustling city of Jeddah and King Abdulaziz International Airport, KAEC SEZ is a gateway to a vast skilled labour pool.

Central to KAEC's appeal is the King Abdullah Port, Saudi Arabia’s modern full-service commercial harbour equipped to handle 30 million tons of bulk and general cargo annually, alongside facilities for 1.5 million vehicles per year. This zone focuses on industries like automobile supply chains, consumer goods, ICT, pharmaceuticals, and MedTech with substantial incentives to investors, including a 5% corporate income tax rate for up to 20 years, permanent 0% withholding tax on profit repatriation, and zero customs duties on intra-zone and inter-zone goods exchanges.

Jazan Economic City (JEC)

Jazan Economic City (JEC) is positioned as a critical hub for energy and manufacturing in Saudi Arabia, strategically situated along a vital maritime route that links Europe, East Africa, and Asia via the Red Sea.

The city is being developed under the auspices of Saudi Aramco, following a Royal Decree in 2013, with a commitment to high-quality infrastructure encompassing a new seaport, industrial areas, residential sectors, and Beesh Corniche. With Saudi Aramco’s involvement, investors are assured of top-tier execution within ambitious timelines.

JEC is focused on sectors such as petroleum refining, petrochemicals, mining, heavy industries, and food processing and packaging. These industries are set to benefit significantly from JEC’s strategic location and advanced logistical capabilities, contributing substantially to the local economy and providing attractive incentives for businesses looking to invest in the region.

Ras Al-Khair Special Economic Zone

Ras Al-Khair Special Economic Zone, located in Saudi Arabia's Eastern Province and spanning 20 km², is strategically positioned near Ras Al-Khair Industrial City. This zone is pivotal to Saudi Arabia's Vision 2030, focusing on expanding the country's industrial base, particularly in mining and maritime industries. It houses the largest shipyard in the MENA region, which supports shipbuilding, maintenance, repair, and overhaul (MRO) services for a variety of vessels including offshore support vessels and very large crude carriers.

This zone is not just a hub for maritime activities but also plays a significant role in the aluminum and phosphate sectors, featuring advanced facilities like smelters and phosphate complexes as well as the integration of cutting-edge technologies such as AI, biometrics, and IoT in its operations. Businesses in Ras Al-Khair can leverage benefits such as reduced corporate income tax, exemption from customs duties, and zero VAT on intra-zone transactions.

The Special Integrated Logistics Zone (SILZ)

The Special Integrated Logistics Zone (SILZ) is strategically positioned near King Khalid International Airport and is specifically designed to enhance the nation's logistics capabilities and streamline operations across the region.

SILZ aims to attract a diverse array of businesses, including sectors like light manufacturing, trading, distribution, and value-added services. With incentives such as no VAT on goods for servicing or manufacturing, suspension of customs duties, and no income tax on certain activities, SILZ offers significant fiscal advantages to both Saudi and foreign investors. The zone's proximity to major transportation links like the airport, rail, metro, and road systems also facilitates easy access to the largest domestic market in the Middle East.

SILZ is equipped with state-of-the-art infrastructure and regulatory frameworks, making it an ideal environment for leading supply chain and logistics firms. Businesses benefit from streamlined administrative processes, a bonded corridor to the airport, rapid certification of goods for export, and flexible Saudisation requirements.

The Cloud Computing Special Economic Zone

The Cloud Computing Special Economic Zone in Saudi Arabia is strategically designed to bolster the nation's digital infrastructure by focusing on the burgeoning needs of the cloud computing, data centres and cybersecurity sectors.

Offering an array of enticing incentives, the zone is set to foster innovation and growth within key digital sectors such as smart mobility, digital healthcare, and Industry X.0. Companies operating in the zone can benefit from a reduced corporate income tax rate of 5% for up to 20 years, a complete exemption from customs duties on goods within the zone and zero VAT on intra-zone transactions. Additionally, there is no withholding tax on profits repatriated from the zone.

How can we assist?

While Economic Zones in Saudi Arabia are still under development and not yet operational, our Saudi and Dubai based consultants can advise on the best entity setup for market entry into KSA. By assessing your core business activities and what you want to do in the Kingdom, we will be able to guide you on the correct setup for your requirements in the Kingdom.