Executive summary

Published in the Official Gazette, Issue 5140, on 16 January 2026, the Saudi Council of Ministers' Ministerial Resolution No. 468 approves the Implementing Regulations (Regulations) governing Special Economic Zones (SEZs) under the authority of the Economic Cities and Special Zones Authority (ECZA). These Regulations establish a framework for economic activities within designated zones in Saudi Arabia.

Additionally, the Regulations aim to enhance the investment landscape, while imposing specific labor and compliance requirements.

The SEZ Bylaws specify that the Zakat, Tax and Customs Authority (ZATCA) will develop a comprehensive procedural guide for tax and customs processes applicable within the designated SEZs. This guide will be created in accordance with the provisions outlined in these Bylaws, as well as the Tax Law and Customs Law, in collaboration with the ECZA.

Detailed discussion

Background

The establishment of the SEZs in Saudi Arabia is part of the country's broader economic diversification strategy. The Regulations were developed under the authority of the ECZA to create a conducive environment for businesses and attract foreign investment.

Additionally, the Regulations outline labor obligations, including Saudization (localization) levels and equal opportunity mandates, requiring businesses to comply within 90 days of the implementation of the Regulations.

The Regulations represent a significant step in Saudi Arabia's strategic agenda for economic and social development, aiming to align with international standards, while fostering a transparent and competitive business environment.

Highlights of the Regulations

Effective date and transition period: The Regulations will come into force 90 days after their publication. Companies operating in the SEZs must comply with the regulatory requirements within this transition period.

Regulatory framework: The ECZA holds the sole authority to issue licenses, permits and regulatory approvals. The Regulations clarify the application of income tax, customs, and zakat rules to SEZ-licensed entities and establish the overarching governance standards applicable within the SEZs.

Tax and customs incentives: The SEZ Bylaws clarify that the ZATCA will issue a detailed procedural guide for tax and customs procedures within the SEZs in light of the provisions of these Bylaws, the Tax Law and the Customs Law, in coordination with the ECZA.

Licensing, establishment and corporate structuring: Entities must obtain an ECZA license and establish their principal place of business within the relevant SEZ. Licensed entities must adopt a Saudi limited liability company (LLC) structure, with the head office located within the SEZ.

Labor and employment rules: The Regulations establish a dedicated labor framework under which Saudization requirements are determined jointly by the ECZA and the Ministry of Human Resources and Social Development (MHRSD), including setting localization rates, minimum wages that must be no lower than national minimums, and future adjustments based on business growth and availability of qualified Saudi talent. The Regulations require SEZ employers to comply with conditions for recruitment, transfer of services and change of profession. They also set rules for how employees can move between different SEZ companies and allow non-Saudi employees to perform work outside the SEZ as long as this does not limit their freedom or ability to carry out their duties effectively. Companies must develop internal labor regulations (based on ECZA-MHRSD templates), apply a strict equality and non-discrimination policy and follow inspection and enforcement procedures handled by MHRSD-appointed inspectors. While the Regulations do not specify immigration processes (e.g., visas and sponsorship rules), they clarify that labor compliance is an integral part of SEZ licensing, and that detailed Saudization and labor rules will be issued separately by the ECZA in coordination with the MHRSD.

Compliance, inspections and enforcement: The ECZA and relevant ministries will exercise inspection and enforcement authority. Noncompliance may result in administrative penalties, including monetary fines, operational restrictions and potential suspension of the SEZ license.

Language and documentation requirements: The competent authorities may use English, in addition to Arabic, for correspondence, notifications, documents and decisions issued to or received from a licensed establishment. However, the Arabic version will prevail in case of any discrepancies between the two languages.

Entities may maintain accounting and supporting records in English, subject to provision of Arabic translations upon request.

Applications for direct tax, value-added tax (VAT) and customs

Direct tax

Licensed companies operating within the Jazan SEZ, Cloud Computing SEZ, Ras Al-Khair SEZ and King Abdullah Economic City (KAEC) SEZ will be subject to Saudi Income Tax Law, its Bylaws and any subsequent amendments. In line with the applicable regulations, the zakat collection system does not apply regardless of ownership composition.

Withholding tax (WHT) exemptions are available for qualifying activities in the Jazan, Ras Al-Khair and KAEC SEZs.

VAT

Domestic supplies to licensed establishments in SEZs

VAT at zero rate applies to supplies of goods made from other regions of Saudi Arabia to an establishment licensed within the SEZs. This treatment also applies to supplies between licensed entities within the same or different SEZs under two conditions: (1) the goods are placed under customs suspension and (2) the goods are connected to the establishment's licensed SEZ activities, in line with criteria set by the ECZA and the ZATCA.

Imports into SEZs from outside Saudi Arabia

Goods imported into one of the four SEZs from outside Saudi Arabia are treated as outside the scope of VAT under two conditions: (1) the goods are placed under customs suspension and (2) the goods are connected to the establishment's licensed activities within the SEZ.

Customs

Customs duties will be suspended on goods brought into a licensed establishment within the SEZs, provided the goods relate to the establishment's licensed activities and are placed under one of the customs duty suspension regimes in accordance with the Unified Customs Law.

The ZATCA may issue the detailed guidelines for tax and customs, including the rules and procedures for the entry of restricted goods.

Implications

Businesses operating or planning to operate within any of the four SEZs should: assess their corporate structures for compliance with the new Regulations; understand specific tax, customs and labor obligations/implications; improve supply-chain processes to leverage available incentives; and update internal governance and human resources policies to align with the regulatory framework.