Regulations on the Economic Substance Requirements for Special Economic Zones

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  • The Board of Directors of the Zakat, Tax, and Customs Authority ("the Board"), based on the powers vested in it by Article (Five) of the Authority's Statute, issued by Council of Ministers Decision No. (570) dated 22/9/1442 AH, and based on the Royal Court President's telegram No. (23435) dated 4/4/1444 AH, which conveyed the gracious approval of the Council of Ministers' resolution No. (233) dated 29/3/1444 AH, establishing four special economic zones in the Kingdom, and pursuant to the provisions of item (Third) of the Royal Court President's telegram No. (23435) dated 4/4/1444 AH, directing the Zakat, Tax, and Customs Authority to prepare the Economic Substance Requirements and verify them annually in the special economic zones - referred to in items (First, Fourth, Fifth, and Ninth) of the aforementioned Council of Ministers decision - and to monitor the establishments operating in those zones within its jurisdiction, and after reviewing the Board's decision No. (01-01-26) dated 10/2/2026 AD, and after reviewing the presentation submitted by the Executive Management regarding the views of Their Excellencies and Honorable Board members and the opinions received from the public and government entities.

  • Decides the following:

  • And Allah is the Grantor of success.

Chapter 1: General Provisions

Article 1: Definitions

  • A- The following words and phrases – wherever they appear in this Regulation – shall have the meanings set forth opposite each of them unless the context requires otherwise:

    • 1- Kingdom: The Kingdom of Saudi Arabia.
    • 2- Authority: Zakat, Tax, and Customs Authority.
    • 3- Regulation: Regulation of the Actual Economic Requirements for Special Economic Zones.
    • 4- Competent Entity: Economic Cities and Special Zones Authority.
    • 5- Statute: Statute of the Competent Entity, issued pursuant to Royal Order No. (A/19) dated 10/3/1431H, and any amendments thereto.
    • 6- Zone: The Special Economic Zone in King Abdullah Economic City, the Special Economic Zone in Ras Al-Khair, the Special Economic Zone in Jazan, and the Special Economic Zone for Cloud Computing and Informatics established pursuant to Council of Ministers Decision No. (233) dated 29/3/1444H.
    • 7- Exemptions and Incentives: The tax and customs exemptions and incentives granted to the licensed establishment in the Zone as indicated in the Statute.
    • 8- Qualified Activities: Activities qualified to obtain the exemptions, incentives, and exceptions approved for the Zone.
    • 9- Licensed Establishment: Any establishment licensed to practice activities in the Zone pursuant to the regulatory bylaws of the Special Economic Zones, issued by Council of Ministers Decision No. (468) dated 10/7/1447H.
    • 10- Actual Economic Requirements: The requirements that must be fulfilled by the licensed establishment to verify its practice of actual economic activities in the Zone, as stipulated in Article Three (3) of this Regulation.
    • 11- Intellectual Property Assets: Any intellectual property rights including copyrights, related rights, patents, trademarks, industrial designs, plant varieties, and layout designs of integrated circuits.
    • 12- Financial Year: The tax year of the licensed establishment.
  • B- Except as provided in paragraph (A) of this Article, any word or phrase not specifically defined in this Regulation shall be defined and interpreted according to the following references in the order mentioned:

    • 1- The legislations applicable in the Zone.
    • 2- The zakat, tax, and customs systems applicable in the Kingdom.
    • 3- The legislations applicable in the Kingdom.

Article 2: Purpose of the Regulation

This regulation aims to define the actual economic requirements that must be fulfilled by the licensed establishment in the area and the related provisions.

Article 3: Scope of Application of the Regulation

The regulation applies to all licensed establishments practicing qualified activities in the area.

Chapter 2: Actual Economic Requirements

Article 5: Intellectual Property Activities

  • 1- The scope of intellectual property activities is considered among the qualified activities according to the classification of qualified activities issued by the competent authority.
  • 2- Incentives and exemptions are not applied to income resulting from intellectual property activities related to the marketing of intellectual property assets.
  • 3- The Authority's Governor may issue the necessary decisions to implement the provisions of this article.

Chapter 3: Tax Procedures

Article 6: Acknowledgment of Actual Economic Requirements

The licensed establishment must submit an annual declaration using the form prepared by the Authority in accordance with the procedures specified by it, in order to verify the fulfillment of the actual economic requirements.

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