Frequently Asked Questions
Comprehensive answers to common questions about Saudi Arabia RHQ requirements.
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General Questions
What is an RHQ License?
A Regional Headquarters (RHQ) License is a business license issued by the Ministry of Investment of Saudi Arabia (MISA) that authorizes foreign multinational companies to establish their regional headquarters in Saudi Arabia. This is required for companies wishing to bid on government contracts valued at SAR 1 million or more.
Why was the RHQ mandate introduced?
The RHQ mandate is part of Saudi Arabia's Vision 2030 economic diversification strategy. It aims to position the Kingdom as a regional business hub by requiring foreign companies seeking government contracts to establish a genuine operational presence in Saudi Arabia, creating jobs and transferring knowledge to the local economy.
When did the RHQ mandate become effective?
The RHQ mandate became effective on January 1, 2024. From this date, foreign companies without a valid RHQ license are blocked from participating in Saudi government contracts valued at SAR 1 million or more.
Is RHQ the same as a branch license?
No. A branch license and an RHQ license are different. Having a branch license does NOT satisfy the RHQ requirement. Companies with existing branch operations in Saudi Arabia must still obtain a separate RHQ license to participate in government contracts above the threshold.
Requirements
Who needs an RHQ License?
Foreign multinational companies that wish to bid on Saudi government contracts valued at SAR 1 million or more need an RHQ license. This includes contracts with ministries, public authorities, and government-backed mega-projects like NEOM, The Line, and Red Sea developments.
What contracts are affected by the RHQ requirement?
The RHQ requirement applies to government contracts valued at SAR 1 million or more. This includes direct government ministry contracts, public authority tenders, PIF (Public Investment Fund) projects, and major government-backed initiatives. Private sector contracts are not affected.
What are the physical presence requirements for an RHQ?
RHQ requirements include maintaining a physical office in Saudi Arabia (typically in Riyadh), employing a minimum number of staff, having senior management presence, and conducting genuine regional business activities from the headquarters. Specific requirements may vary based on company size and industry.
What staffing requirements apply to RHQ?
Companies must maintain a minimum number of employees in Saudi Arabia, including senior management/C-level presence. Saudization requirements (Nitaqat compliance) also apply. The specific headcount requirements vary based on company size, industry, and the scope of regional operations.
Application Process
How do I apply for an RHQ License?
The RHQ application is submitted through the MISA (Ministry of Investment) Invest Saudi portal. The process involves creating an account, submitting company documentation, providing a regional business plan, and demonstrating the ability to meet physical presence requirements.
What documents are required for the RHQ application?
Required documents typically include: Certificate of Incorporation (certified and apostilled), Memorandum and Articles of Association, Board Resolution authorizing RHQ establishment, audited financial statements, Power of Attorney for Saudi representative, and a regional headquarters business plan.
How long does the RHQ application process take?
The typical timeline is 3 to 6 months from start to license issuance. This includes document preparation (2-4 weeks), MISA review (4-8 weeks), and physical setup phase (4-12 weeks). Having all documents properly prepared in advance can significantly reduce processing time.
Can I expedite the RHQ application?
While there is no official expedited process, having complete and properly certified documentation from the start, responding promptly to any MISA queries, and beginning physical setup in parallel with the application review can help minimize the overall timeline.
Deadlines & Penalties
What happens if I don't have an RHQ License?
Companies without a valid RHQ license are blocked from participating in government tenders above the SAR 1 million threshold. This means you cannot submit bids, be considered for contracts, or in some cases continue with existing government contract relationships.
Are there monetary fines for non-compliance?
The RHQ mandate doesn't impose direct monetary fines. The consequence is being blocked from tender participation. The "cost" is the lost business opportunity — contracts you cannot bid on, win, or retain while non-compliant.
Can I get a temporary exception while my application is in progress?
Yes, companies with RHQ applications actively under review may apply for temporary exemptions to continue participating in tenders while awaiting license issuance. This requires demonstrating that an application has been submitted and is in active processing.
Does the RHQ requirement apply to subcontractors?
Subcontractor requirements often depend on the prime contractor's requirements and the specific tender terms. In many cases, subcontractors working on major government projects may also need to demonstrate RHQ compliance, particularly for significant subcontract values.
Exemptions & Special Cases
Are there any industries exempt from RHQ requirements?
While the core RHQ requirement is broadly applicable, certain regulated industries may have modified requirements based on existing regulatory frameworks. However, exemptions are limited and most foreign companies pursuing government contracts need to comply.
Does the RHQ requirement apply to NEOM and other mega-projects?
Yes, NEOM and other Vision 2030 mega-projects (The Line, Red Sea Project, Qiddiya, etc.) are government-backed initiatives where RHQ compliance is typically required. These projects often represent significant contract values well above the SAR 1 million threshold.
Can joint ventures satisfy the RHQ requirement?
Joint venture structures may have specific RHQ implications depending on how the JV is structured and registered. In many cases, foreign participants in JVs still need individual RHQ compliance. The specific requirements depend on the JV structure and the nature of the government contracts being pursued.
What if my company only provides services below the SAR 1M threshold?
If your contracts are consistently below the SAR 1 million threshold, RHQ compliance is not required for those specific contracts. However, if your business may grow or you anticipate larger contracts in the future, early RHQ compliance can be strategically beneficial.
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