Saudi Arabia has softened — but not scrapped — its controversial Regional Headquarters (RHQ) policy. The ripple effects are being felt strongly by UAE-based businesses eyeing lucrative government contracts in Saudi Arabia.
The Background
Since early 2024, Saudi government entities have been barred from contracting with foreign companies whose regional headquarters sit outside the Kingdom. The rule was a deliberate push to draw multinationals to Riyadh and reduce dependence on Dubai as the Gulf’s corporate hub.
What’s Changed?
Saudi Arabia’s Local Content and Government Procurement Authority has now introduced a formal exemption mechanism. Government entities can apply — through the Ministry of Finance’s Etimad digital platform — to contract with non-RHQ firms under specific conditions:
- The project has not received more than one technically compliant bid.
- The foreign firm’s bid is at least 25% cheaper than the next best offer
- The contract is valued at SAR 1 million (~$266,000) or less
Exemption requests must be filed digitally before a tender is launched or a direct contract is issued.
What It Means for UAE Firms
For UAE-based companies, the rules remain challenging. The exemptions are narrow and heavily price-driven — meaning only firms offering significant cost advantages are likely to qualify. Those pursuing mid-to-large Saudi government contracts will still face pressure to establish a Riyadh presence.
Over 700 multinational companies had already relocated their regional headquarters to Riyadh by early 2026 — surpassing Saudi Arabia’s original target of 500 companies by 2030.
The Bottom Line
The revised framework is a calibrated move — Saudi Arabia is keeping its pro-Riyadh relocation push intact while allowing just enough flexibility to avoid stalling critical projects. UAE firms must weigh the cost of setting up a dual HQ against the value of Saudi government business.
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