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Justice GCC > Legislation > Saudi Arabia Introduces Exemption Process for Government Contracts With Firms Lacking Local Headquarters
Legislation

Saudi Arabia Introduces Exemption Process for Government Contracts With Firms Lacking Local Headquarters

NewsDesk
Last updated: February 19, 2026 12:00 am
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The Local Content and Government Procurement Authority unveiled the formal exemption system to reconcile the strict Relocation of Headquarters policy in effect since early 2024 with the demands of major public projects that often require specialised expertise or highly competitive bids. Under the original rule all government bodies, funds, institutions and affiliated agencies were barred from contracting with foreign companies whose regional headquarters lay outside the Kingdom. The authority confirmed that targeted relief can now be sought for individual projects, groups of projects or defined periods provided applications reach the designated committee before any tender launch or direct contracting begins.

According to the authority government entities must submit exemption requests through the dedicated electronic service on the Etimad digital platform that became operational in November 2025. The platform offers a standardised channel for regulated applications while older tenders or those issued outside the system continue under the previous manual approval route. The authority stressed that all requests require supporting justification tied directly to project needs such as unique technical capabilities not readily available among firms that have already relocated.

Ministry of Investment statistics place the number of international companies holding regional headquarters licences at more than 780 by the first quarter of 2026 exceeding the original Vision 2030 target of 480 establishments by 2030. The programme launched in 2021 grants qualifying firms a range of incentives including multi-year tax exemptions eased Saudisation obligations and accelerated government services. Separate ministry records show 184 new licences were issued in the first half of 2024 alone reflecting sustained uptake.

The relocation requirement forms a central pillar of efforts to anchor multinational corporate functions inside Saudi Arabia and to increase local economic spillovers from government spending. Participating companies must conduct key strategic activities such as regional budgeting market analysis and operational reporting from their Saudi offices according to programme guidelines. The new exemption pathway provides flexibility for cases where rigid enforcement could delay critical infrastructure or reduce value in competitive procurement.

The authority noted that approved exemptions remain limited in scope applying only to the nominated contracts without changing the general preference for firms that have completed the headquarters move. Requests must demonstrate clear project-specific grounds and undergo committee review before any award decision. This structured approach maintains the policy’s core objectives while addressing practical constraints encountered in complex tenders.

Ministry of Finance oversight of the Etimad platform ensures exemption applications integrate seamlessly with the Kingdom’s broader digital procurement ecosystem. The platform already processes the majority of government tenders and contract awards across multiple sectors. Integration of the exemption service therefore supports consistent application of the revised rules without disrupting existing workflows.

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ByNewsDesk
Justice GCC NewsDesk is the desk responsible for Justice GCC's daily news coverage, monitoring and reporting developments across the Gulf from official sources, including national news agencies and government communications. Its focus is accurate, timely and factual coverage of the region.
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