Saudi Arabia has introduced new regulations to create a more flexible investment environment while safeguarding public spending and national economic priorities.
Under the updated rules, government entities may sign contracts with international companies that do not maintain a regional headquarters in the Kingdom, provided specific regulatory conditions are met. These exceptions are designed to ensure efficient spending and the timely execution of strategic projects.
How the Exemption Process Works
The Local Content and Government Procurement Authority has notified all government bodies about the new exemption mechanism. Requests must be submitted through the official Etimad digital platform.
Two primary objectives must be satisfied:
- Supporting the broader regional headquarters relocation strategy launched in early 2024.
- Addressing genuine project requirements, especially when specialized expertise or highly competitive financial offers are involved.
Background: The 2024 Headquarters Relocation Decision
Beginning in early 2024, the Saudi government suspended contracts with foreign companies whose regional headquarters are located outside the Kingdom.
This regulation applies to:
- All government ministries and agencies
- Public institutions
- Government funds
- Affiliated entities
The decision formed part of Saudi Arabia’s broader strategy to encourage multinational corporations to establish their regional headquarters within the country.
Regulatory Framework for Exemptions
According to official sources, the Local Content and Government Procurement Authority has issued a clear regulatory framework governing contracts with companies that lack a regional headquarters in Saudi Arabia.
Exemptions may be requested for:
- A single project
- Multiple projects
- A defined time period
Important: Exemption requests must be submitted before issuing a tender or initiating direct contracting procedures.
Two official circulars have been released outlining:
- The exemption submission process
- Procedures for related contractual cases
The electronic exemption service officially launched on the Etimad platform in November 2025.
Who Can Use the Etimad Exemption Service?
The service is available to government entities that publish tenders via the Etimad platform.
For:
- Tenders issued before November 2025
- Tenders published outside the Etimad platform
The previous submission procedures remain in effect.
What Is the Etimad Platform?
Etimad is the official electronic financial services portal operated by Saudi Arabia’s Ministry of Finance. It supports digital transformation across government operations and enhances:
- Budget management
- Contract administration
- Payments
- Tender processes
- Public procurement systems
The platform also promotes transparency, efficiency, and smoother collaboration between public entities and private sector companies.
Can Foreign Companies Without a Regional HQ Still Bid?
Yes. The regulations do not entirely prohibit such companies from participating in public tenders.
However, their bids will only be accepted under two specific conditions:
- If only one technically qualified bid is submitted.
- If the company’s offer is technically approved and at least 25% lower than the second-best bid.
Additionally, projects valued at SR1 million or less are exempt from these restrictions.
Strong Growth in Regional Headquarters Relocation
By early 2026, more than 700 foreign companies had relocated their regional headquarters to Saudi Arabia, surpassing the original target of 500 companies by 2030.
This milestone supports Saudi Arabia’s ambition to become a leading regional business hub and an attractive destination for global talent and expertise.
Why Was This Rule Introduced?
When the initial suspension of contracts was announced, the government explained that the objectives included:
- Encouraging deeper integration of foreign firms into the Saudi economy
- Creating more employment opportunities for citizens
- Reducing economic leakage
- Improving government spending efficiency
- Ensuring key goods and services are delivered locally with strong local content
Overall, the updated exemption framework balances flexibility with Saudi Arabia’s long-term economic transformation and localization goals.
