Amazon, Microsoft, and Google Set to Establish Headquarters in Saudi Arabia
Tech powerhouses such as Amazon.com Inc., Google’s Alphabet Inc., and Microsoft Corp. are among the companies intensifying their operations in Saudi Arabia, driven by the government’s declaration to cease contracts with firms that lack regional headquarters in the nation.
These three American corporations have all secured licenses to set up regional bases in Riyadh, according to a government database. These approvals were granted just before the Saudi government’s deadline of January 1.
The end of the year saw a surge of activity as major corporations sought to establish local headquarters. Airbus SE, Oracle Corp., and Pfizer Inc. are among the companies that have recently obtained such licenses.
In February 2021, Saudi Arabia unveiled new regulations for state contracts, aiming to curb ‘economic leakage,’ a term the government uses to describe state expenditures that can benefit companies without a significant presence in the country.
A central aspect of Crown Prince Mohammed bin Salman’s economic strategy is to reduce the billions in government and citizen spending that exit the country each year. Government officials aim to halt contracts with international firms that merely shuttle executives in and out of the kingdom.
In his efforts to stimulate the economy and draw international investment, MBS, as the Crown Prince is commonly known, has eased restrictions on gender mixing, women driving, and public entertainment. Saudi Arabia’s position as the region’s largest economy, with plans to invest trillions of dollars to become a tourism and commercial hub, has prompted many multinational companies to reconsider their operations in the Middle East.
The Saudi initiative is widely viewed by business and political analysts as a bid to rival Dubai, the Middle East’s leading business hub. Dubai has long been favoured by multinational companies for its lifestyle, low taxes, and connectivity.
Historically, most global companies have managed their Middle East operations from offices in Dubai, the region’s commercial and financial centre, maintaining smaller offices in Saudi cities like Riyadh or Dammam, near Saudi Aramco’s headquarters. The implications of the Riyadh headquarters for operations in other parts of the region remain unclear.
Microsoft stated in an email statement to the press, that Saudi Arabia is part of its CEMA — Central & Eastern Europe, Middle East & Africa — region. “In this highly diverse region, we have several headquarters, including one in Saudi Arabia,” the statement read.
Google is liaising with the relevant authorities regarding the requirements, while Airbus confirmed that its setup in the kingdom complies with the country’s regulations. Under Saudi rules, companies can be awarded a special HQ license if they establish a centre in Riyadh that meets various criteria, including a minimum of 15 staff and reporting to two other countries. In return, Riyadh is offering incentives such as tax breaks and exemptions from Saudi hiring rules.
In December, the government announced it would provide a 30-year tax holiday for companies with a specific regional headquarters license.
