Saudi Arabia Eases Regional HQ Rule, Offers Limited Relief to UAE Firms Bidding for Government Contracts

The revised framework does not отмен the RHQ policy introduced in early 2024. Instead, it outlines circumstances under which Saudi government entities may request approval to contract with foreign firms that do not maintain a regional headquarters in Saudi Arabia.

The earlier rule prohibited government bodies from awarding contracts to foreign companies whose regional headquarters were located outside the Kingdom. This requirement had prompted several multinational firms to relocate or establish parallel headquarters in Riyadh to maintain eligibility for public tenders.

Under the updated guidelines, Saudi government entities can now apply for exemptions before launching a tender or issuing a direct contract. Requests must be submitted digitally and are reviewed by a designated committee.

Exemptions may apply to a specific project, a group of projects, or a defined time period. Two official circulars detail how applications are processed and how existing contracts are treated under the revised structure.

The exemption process is managed through the Ministry of Finance’s Etimad platform, the Kingdom’s central digital portal for budgets, tenders and government procurement. Only tenders issued through Etimad qualify for the exemption mechanism. Projects launched before the platform’s rollout, or outside the system, continue under earlier procedures.

Despite the relaxation, foreign companies without a Saudi RHQ are not automatically eligible for contract awards. Their bids can be accepted only in limited situations. These include cases where only one technically compliant bid is received, or when a foreign company’s proposal is at least 25 per cent lower than the next competitor.

Additionally, projects valued at SAR1 million ($267,000) or less are fully exempt from the RHQ requirement.

Saudi authorities say the changes are intended to preserve public spending efficiency while ensuring strategic projects are delivered on time. The government maintains that the broader RHQ policy remains in place as part of efforts to strengthen local economic presence and encourage multinational investment within the Kingdom.

For UAE-based firms, the adjustment provides a degree of operational flexibility. Many companies continue to serve Saudi clients without relocating their regional headquarters. The exemption framework allows Saudi entities to access specialized expertise or competitive pricing when required, without fully dismantling the RHQ rule.

In January, Saudi officials stated that more than 700 international companies have already established regional headquarters in the Kingdom. The original policy led several multinationals to restructure their regional operations, with some maintaining dual headquarters in both Dubai and Riyadh.

The revised approach signals that while Saudi Arabia remains committed to its regional headquarters strategy, it is prepared to introduce targeted exceptions to support procurement efficiency and project delivery.