Tax Insights

Establishment of Special Integrated Logistics Zones

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In a bid to continue developing and positioning the Kingdom of Saudi Arabia (KSA) as a diverse and innovative market, a Royal Decree has recently announced the establishment of a new Special Integrated Logistics Zones, with the first such zone to be situated at King Khalid International Airport.

GACA has launched ILBZ – Saudi Arabia’s first integrated logistics zone in Riyadh – the inaugural project in a series of planned special logistics zones supporting His Royal Highness Crown Prince Mohammed bin Salman’s ambitious vision to make it one of the 10 largest city economies in the world – and supporting wider efforts to make the Kingdom a globally competitive transportation and logistics hub for the movement of goods and services around the world, within a progressive business-friendly environment.

The zone development will offer incentives to companies to establish operations at its site adjacent to the international airport in Riyadh, provided certain conditions can be met, and will have direct and indirect tax consequences as a result.

ILBZ entities would be subject to the following:

  • A 50-year Tax Holiday to include VAT suspension while under customs suspension.
  • Zero-rated corporate, income and withholding tax on certain payments.
  • 100% business ownership.
  • 100% suspension of customs and import restrictions: and
  • No restrictions on capital repatriation.

The zone will offer aviation facilities, cargo handling, government-sponsored training programs and advanced cargo-tracking technology, alongside a Government Services Office in the ILBZ to serve as a one-stop-shop to obtain any government services for investors.

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Further guidance will be issued by the GAZT to specify the conditions and the procedures that ILBZ entities will need to follow to benefit from the tax and customs incentives.

To discuss the implications of these zones, feel free to contact

Adel Daglas, Director of Tax for Grant Thornton Saudi Arabia,