Saudi Arabia Issues Regulations for Special Economic Zones under (Royal Decree No. M/140)

4 min 27 sec March 13, 2026 (Edited)

Written by

Samer Qudah

Partner, Head of Corporate

s.qudah@tamimi.com View LinkedIn Profile

Omar Alhumaid

Partner

o.alhumaid@tamimi.com View LinkedIn Profile

Saudi Arabia has issued a comprehensive package of regulations for four Special Economic Zones (SEZs) – Jazan, King Abdullah Economic City (KAEC), Ras Al-Khair, and a dedicated Cloud Computing and Informatics Zone, pursuant to Royal Decree No. (M/140) and Council of Ministers Resolution No. (468). The regulations were published in the Official Gazette (Umm Al-Qura) Issue 5140 dated Friday 27 Rajab 1447 AH, corresponding to 16 January 2026, and will enter into force 90 days after publication (15 April 2026).

What’s New

Regulatory carve-outs and corporate framework: Companies licensed to operate in the SEZs are exempted from the Companies Law (Royal Decree No. M/132)

• and the Commercial Registration and Trade Names Regulations (Royal Decree No. M/83) as specified in the Council of Ministers Resolution accompanying the Royal Decree. The relevant authority is directed to issue necessary rules on governance, rights, duties, obligations, and responsibilities of such licensed companies. Across all zones, companies must be Saudi-nationality limited liability companies (single or multiple member) registered in a Companies Register maintained by the relevant authority (in coordination with the Ministry of Commerce), with principal headquarters in the zone. The company will acquire legal personality upon registration, and all pre-registration actions transfer to the company upon registration subject to cost assumption. The registration must follow prescribed trade-name rules including denoting incorporation in the zone and avoiding conflicts with existing or famous names. Companies may adopt partner agreements or family charters that prevail over the articles of association.
• Tax, zakat, VAT and customs: Subject to the exemptions and incentives programme, licensed establishments in the zones are subject to income tax and not the Zakat Collection Law, and they enjoy withholding tax exemptions to the extent set out in the zone regulations (with the Cloud Zone following its own text). The regulations introduce a consistent VAT and customs model: 0% VAT for qualifying domestic supplies into and between zones where goods are under customs suspension and linked to licensed activities, imports treated as out of scope for VAT in similar circumstances, customs duties applied under suspended customs regimes per the Unified Customs Law, and a commitment by ZATCA to issue detailed tax and customs procedural guides for each zone.
• Zone-specific governance and competent authorities: Governance is shared between the Cities and Special Economic Zones Authority (the Authority) and competent bodies. Jazan and Ras Al-Khair are governed by the Royal Commission for Jubail and Yanbu (RCJY), whilst the Cloud Computing and Informatics Zone is governed by the Communications, Space and Technology Commission (CST) in coordination with the Royal Commission for Riyadh City (RCRC). KAEC operates with Emaar Economic City Company as the ‘interested entity’ while the Authority retains regulatory control functions.
• Labour and workforce nationalisation: Each zone includes labour governance coordinated with the Ministry of Human Resources and Social Development, including zone‑specific workforce nationalisation rate, set in line with business growth, national talent availability, and incentives. Transfer of services, change of profession, and manpower mobility between licensed establishments are subject to zone rules, with limited allowances for non‑Saudis to work outside the zone under specified conditions. Licensed establishments are required to adopt internal work regulations in the form prescribed by the Authority, along with equal opportunity policies and potential minimum wage setting not below national Labour inspections are coordinated with MHRSD; a specialized committee hears grievances; violations and fines are classified with gradation, warning principles, and suspension rules, with appeal to the Administrative Court. English may be used alongside Arabic for submissions and records, with Arabic prevailing in case of conflict.
• Investor focus: Investors and operators contemplating setup should begin to assess eligibility for zone incentives, plan their LLC incorporationwithin the Authority’s registry framework, and align workforce planning with zone‑specific labour requirements ahead of the effective date of 15 April 2026.

The introduction of these comprehensive SEZ regulations represents a significant step in Saudi Arabia’s efforts to diversify its economy and enhance its attractiveness as a destination for foreign and domestic investment. By offering a distinct regulatory environment — including streamlined corporate structuring, favourable tax and customs treatment, and tailored labour frameworks — the new zones are poised to facilitate advanced industrial, logistics, and digital infrastructure projects. Investors and businesses seeking to establish or expand operations in the Kingdom should view these developments as a timely opportunity to leverage the incentives on offer and position themselves within Saudi Arabia’s evolving economic landscape ahead of the regulations coming into force on 15 April 2026.

Saudi Arabia has issued a comprehensive package of regulations for four Special Economic Zones (SEZs) – Jazan, King Abdullah Economic City (KAEC), Ras Al-Khair, and a dedicated Cloud Computing and Informatics Zone, pursuant to Royal Decree No. (M/140) and Council of Ministers Resolution No. (468).

Why contact Al Tamimi

Our integrated corporate, tax, and regulatory teams across Saudi Arabia and the wider region advise on end-to-end SEZ execution by assessing eligibility and incentive alignment, structuring supply chains to optimize VAT and customs treatment, securing licenses and permits with the competent authorities, incorporating and registering LLCs in the Authority’s Companies Register, drafting partner agreements and family charters, implementing labor and mobility frameworks compliant with zone rules, and supporting cloud/data governance for the Cloud Computing and Informatics Zone. We combine local regulatory know-how with transaction execution to accelerate timelines, de-risk approvals, and align zone benefits with your commercial objectives.

For further information kindly contact Samer Qudah s.qudah@tamimi.com or Omar AlHumaid O.AlHumaid@tamimi.com