[Country Report] Kingdom remains open to foreign investment

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[Country Report] Kingdom remains open to foreign investment

The Kingdom of Saudi Arabia realizes that achieving its ambitious economic goals requires a steady flow of technology and expertise into the country. Therefore, its policy is to welcome foreign capital and invite it to participate in the economic development projects in cooperation with Saudi business. The government policy aims not to impose any restrictions on the movement of capital inflow but to respect private ownership.

In addition, foreign investment that fulfills the requirements of the Foreign Capital Investment Code enjoys all privileges of national capital and is entitled to the same treatment, protection, and incentives accorded to national capital. The Code requires that foreign capital be invested in economic development projects (which, under the Code, do not include petroleum and mineral projects). Development projects are defined by the Ministry of Industry and Electricity.

Provided that the share of national capital is at least 25 percent, industrial or agricultural projects that fulfill the above requirements enjoy the following benefits:

An income tax holiday of up to 10 years from the commencement of commercial production.

Ownership of land according to the regulations governing land ownership by non-Saudis.

For industrial projects, the same privileges are given as the Saudi capital under the National Industries Protection and Encouragement Regulations. These privileges include:

Exemption from customs duties on machinery, equipment, tools and spare parts imported for industrial products.

Exemption from customs duties on primary raw materials, semi-finished goods, containers, etc., necessary for industrial projects (provided that similar items are not sufficiently available locally).

Provision by the government of plots of land at a nominal rate for factories and residential quarters for workers.

Low electricity and water rates.

No restriction on repatriation of profits.

Preferential treatment for local products in government procurement in addition to preferential treatment accorded to national products by Arab League and Saudi Arabian bilateral trade agreements.
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