heroBackgroundImg

- Normal
- Grey
- Bright
- Contrast

Economic Substance Requirements Regulations of Special Economic Zones

Add Comment ؟

You can add your visuals to the project with no more than 5000 characters,1000 Characters left

Add comment

Comments

1.00000000000000

1.00000000000000

Article One Definitions

A.	Wherever contained herein, the following terms and expressions shall have the meanings ascribed thereto unless the context otherwise requires:
1.	The Kingdom: The Kingdom of Saudi Arabia
2.	The Authority: Zakat, Tax and Customs Authority.
3.	The Governor: The Governor of the Authority.
4.	The Governing Body: Economic Cities and Special Zones Authority.
5.	The Statute: The statute of The Governing Body issued by the royal decree No (A\19) dated 10\03\1431H, and any amendments thereto.
6.	The Zone: King Abdullah Economic City's Special Economic Zone, Ras Al-Khair Special Economic Zone, Jazan Special Economic Zone, and Cloud Computing Special Economic Zone, established under The Statute’s provisions.
7.	Exemptions and Incentives : The tax and customs exemptions and incentives available for the Investor in the Zone, as referred to in Article Twenty (20) of the Statute.
8.	Qualified Activities: The activities that shall qualify for the exemptions, incentives, and exceptions approved for the Zone.
9.	Investor: A person authorized to carry on all the Qualified Activities in accordance with The Statute and the issued regulations.
10.	Economic Substance Requirements: The requirements that must be satisfied by the Investor to ascertain the substance of the economic activities in the Zone, as prescribed in Article Three (3) of these Regulations.
11.	Intellectual Property Assets: Means any intellectual property rights, including copyright and related rights, patents, trademarks, industrial models, plant varieties and layout designs for integrated circuits
12.	Financial Year: The accounting fiscal year of the Investor.
B.	Notwithstanding Paragraph (A) of this Article, any term or expression used in these Regulations which is not defined in this Article shall be defined and interpreted according to the following reference in the order in which they appear: 1. Legislations in force in the zone. 2. Zakat, Tax, and Customs laws in force in the Kingdom. 3. Legislations in force in the Kingdom

Article Two Purpose of the Regulation

2.00000000000000

2.00000000000000

Article Three Economic Substance Requirements

A.	The Investor has to meet the following Economic Substance Requirements every year, beginning from the first Financial Year in which the Qualified Activities are carried out:
1.	The Investor must have adequate premises and assets that are suitable for conducting his Qualified Activities in the Zone.
2.	The Investor must employ an adequate number of full-time employees (who are physically present in the Zone) during the Financial Year, in proportion to the Qualified Activities, shall include personnel with an employment contract with companies contracting with the investor.
3.	The Investor must incur operational expenditures in the Zone, which shall be commensurate with the nature of the Qualified Activities carried out.
4.	The Qualified Activities of the Investor shall be directed and managed from within the Zone, including:
4.1	Without prejudice subparagraph (1) of item (B) of this Article, at least one of the directors responsible for managing the Qualified Activities residing in the Kingdom.
4.2	The management must have the necessary qualifications to manage the Qualified Activities.
4.3	A number of board of directors’ meetings, or any equivalent board in accordance with the investor’s legal entity, should be held, during which actual and strategic decisions shall be made and recorded in the meeting minutes, in accordance with the Qualified Activities, provided that the quorum of members of the Board of Directors is reached for these meetings in the Kingdom.
B.	Without prejudice the requirements mentioned in paragraphs (A) of this Article, the Investor that carried out intellectual property activities must satisfy the following additional requirements:
1.	At least 50% of the directors managing the Qualified Activities must be residents of the Kingdom.
2.	The Investor must provide a detailed business plan demonstrating the commercial rationale for holding the Intellectual Property Assets in the Zone.
3.	The Investor must provide detailed employee information, including level of experience, type of contracts, qualifications, and duration of employment.
4.	Making strategic decisions and managing and bearing risks related to Intellectual Property Assets in The Zone.
5.	The activity of the Investor must not be limited to marketing Intellectual Property Assets.

Article four Intellectual Property Activities

3.00000000000000

3.00000000000000

4.00000000000000

Last update: 11 February 2026

By continuing to use our website, you acknowledge the use of cookies Privacy Policy