Saudi Arabia free zones in 2023

Manufacturing will be the greatest driver of the Saudi economy over the coming decade. The kingdom’s core oil and petroleum sector will become less important. We expect further large-scale investments in logistics infrastructure to support and stimulate manufacturing and industrial growth, as well as access to low-cost utilities and labour.

We expect Saudi Arabia’s network of i) industrial cities and ii) economic cities to attract new foreign investments. Companies established in these ‘free zones’ can be 100% foreign owned.

• Industrial cities

  Currently the Kingdom counts with 28 industrial cities, all under the administration of the Saudi Industrial Property Authority (MODON).

  Advantages include i) low land lease ii) availability of loans of up to 75% of the capital, with an extended repayment period of 20 years and iii) custom duty exemption for raw material and equipment.

  The most famous industrial cities are: i) Jubail and ii) Yanbu. Both are major center for production of petrochemicals, chemic fertilizer, industrial gases, steel, iron and oil.

• Economic cities

  Tax incentives have yet to be announced, however it will include i) tax deductibility for training and salary costs and ii) tax exemption from customs duties on machinery and raw materials. Furthermore, projects with more than SAR 1 million capital and more than 5 Saudi national employees will be granted further deductions.

  • King Abdullah Economic City

    • The biggest of all of the economic cities, will cover an area of 168km²;
    • Main industries: port and logistics, light industry and services;
    • It expected to create 1 million jobs and to hold 2 million people;
    • It is being developed by Emaar the Economic City.

  • Knowledge Economic City

    • Located near the Holy Mosque of the Prophet in Medinah, it will cater to companies with a focus on Islamic education and services;
    • It will create 20,000 jobs and hold a population of 200,000 people.

  • Prince Abdulaziz Bin Mousaed Economic City

    • Will cover an area of 156km²;
    • It will create half a million jobs and hold 80,000 people;
    • The main industries are logistics, agribusiness, minerals and construction materials.

  • Jazan Economic City

    • It will focus on energy and labor intensive industries;
    • It will create 500,000 new jobs and will accommodate 250,000 people;
    • The main part of this Economic City is the Industrial park, which will occupy 2/3 of the space.

• Comparison table

  KSA Economic Industrial Zones	King Abdullah Economic City	Jubail Industrial City	Yanbu Industrial City	Ras Al-Khair Minerals City	Jazan Economic City (JEC)
  Summary at a glance
  Total year 1 engagement set up costs? (USD)	87,627	87,627	87,627	87,627	87,627
  Total subsequent yearly costs (incl. audit and tax)?	19,420	19,420	19,420	19,420	19,420
  Minimum paid-up share capital required (USD)?	134,000	134,000	134,000	134,000	134,000
  Free zone mostly popular in which industry?	Logistics Light industry Lubricants Pharmaceuticals	Hydrocarbons Power and water Petrochemicals Fertilisers Oil refining Steel & Plastics	Oil refining Petrochemicals Plastics Metals	Fertilisers Aluminium Conversion industries	Metals Oil refining Food processing
  Total engagement period?	7 months	7 months	7 months	7 months	7 months
  Exempt from corporation tax and GST?	No	Yes	Yes	No	Yes
  Exempt from customs duties on machinery & raw materials?	No	Yes	Yes	No	Yes
  100% foreign owned?	Yes	Yes	Yes	Yes	Yes
  Average monthly warehouse rental (per sq. m.)?	US$11	US$7	US$8	US$8	US$12
  Manufacturing allowed in the free zone?	Yes	Yes	Yes	Yes	Yes
  Legal considerations
  Local or national shareholder required?	No	No	No	No	No
  Minimum number of shareholders	1	1	1	1	1
  Minimum number of directors	1	1	1	1	1
  Resident director required	No	No	No	No	No
  Resident company secretary required	No	No	No	No	No
  Public register of shareholders and directors	Yes	Yes	Yes	Yes	Yes
  Minimum paid-up capital required? (US$)	134,000	134,000	134,000	134,000	134,000
  Global sales exempt from corporate tax?	No	No	No	No	No
  Must register for GST/VAT?	Yes	Yes	Yes	Yes	Yes
  Global sales exempt from GST/VAT?	Yes	Yes	Yes	Yes	Yes
  Social security on employees’ remuneration?	12%	12%	12%	12%	12%
  Corporation tax payable on local sales?	20%	20%	20%	20%	20%
  Annual audited financial statements?	Yes	Yes	Yes	Yes	Yes
  Government grants for manufacturing?	Yes	Yes	Yes	Yes	Yes
  Access to how many double tax treaties?	52	52	52	52	52
  Average customs tax on imports?	0.5% to 15%	0.5% to 15%	0.5% to 15%	0.5% to 15%	0.5% to 15%
  Can rent premises outside free zones?	Yes	Yes	Yes	Yes	Yes
  Can make sales to overseas Clients?	Yes	Yes	Yes	Yes	Yes
  Allowed to make sales to local Clients?	No	No	No	No	No
  Government approval required?	Yes	Yes	Yes	Yes	Yes
  Average skilled labour monthly salary	US$2,500	US$2,500	US$2,500	US$2,500	US$2,500
  Average unskilled labour monthly salary?	US$900	US$900	US$900	US$900	US$900
  Can the entity hire expatriate staff?	Yes	Yes	Yes	Yes	Yes
  How long to get work permit approved?	2 months	2 months	2 months	2 months	2 months
  Monthly office rental (per sq. m.)?	US$15	US$17	US$15	US$20	US$15
  Average annual Industrial space rent per 1000 sq ft	US$130,000	US$90,000	US$100,000	US$95,000	US$90,000
  Allowed to import raw materials?	Yes	Yes	Yes	Yes	Yes
  Allowed to export goods?	Yes	Yes	Yes	Yes	Yes
  Nearest large port?	King Abdullah Port	Jubail Commercial Port	Yanbu Commercial Port	Ras Al-Khair Port	Jazan Port
  Nearest to which international airport?	King Abdulaziz International Airport	King Fahd International Airport	Prince Abdulmohsin Bin Abdulaziz Airport	King Fahd International Airport	King Abdullah bin Abdulaziz Airport
  Proximity to train network?	Rabigh Station	101.8 km	500km	750km	660km
  Time to obtain corporate bank account	7 weeks	7 weeks	7 weeks	7 weeks	7 weeks
  Recommended bank?	SABB	Samba	QNB	Bank Al Jazira	ANB
  Travel required for bank account opening?	Yes	Yes	Yes	Yes	Yes
  Multi-currency bank accounts available?	Yes	Yes	Yes	Yes	Yes
  Overseas remittance currency controls?	No	No	No	No	No
  Other considerations
  OPEC member?	Yes	Yes	Yes	Yes	Yes
  OECD member?	No	No	No	No	No
  FATCA reporting?	Yes	Yes	Yes	Yes	Yes
  CRS reporting?	No	No	No	No	No
  Is the jurisdiction blacklisted?	No	No	No	No	No