KSA Regional Headquarters Update

In brief

In October 2026, the Zakat, tax and Customs Authority (ZATCA) issued a user manual on the Economic Substance Requirements (ESR) annual disclosure form that RHQs in KSA must file. This follows the development in August 2026, when the ESR declaration form went live on the ZATCA Portal for RHQs in the Kingdom.​

RHQs must now submit the ESR form through the ZATCA Portal (Erad). RHQs filing their tax returns must therefore demonstrate compliance with ESR.​

Our point of view​

Transition from statement to test: With the form now live, ESR for RHQs has transitioned from a requirement statement to an actual test of substance. These requirements put real emphasis on RHQs’ role as a ‘regional administrator’ in the Middle East and North Africa (MENA) region. ​

One RHQ, one set of facts: ZATCA and MISA now see the same RHQ through several filings:​

• the corporate tax return and the transfer pricing disclosure form that forms part of it;​
• the transfer pricing documentation;
• the annual ESR form;​
• MISA's ongoing reporting and evaluations.​

These are often prepared by different teams at different times. ZATCA verifies ESR compliance every year. Headcount, executive roles, residency, activities and financial figures should therefore reconcile across every filing. ​

Substance and Form are two sides of the same coin: a common example, if an RHQ charges management fees for strategic oversight, it must be able to show that the regional oversight actually takes place within the RHQ, and the ESR form now formally documents this.​

Financial disclosures bring eligible income into focus: The ESR form requires RHQs to disclose eligible/non eligible income, from RHQ activities, operating expenditure and assets held in KSA. This increases the importance of ensuring that income benefiting from the 0% (30 years) CIT incentive is supported by the RHQ's activities and is consistent with its financial statements and transfer pricing documentation.​

Board governance is now subject to more structured disclosures: Board minutes are now of significance to ESR compliance and subject to external scrutiny. The ESR form requires disclosing meeting outcomes and observations, so minutes now need to show that strategic regional decisions are taken in Saudi Arabia.​