RHQ Deadlines, Consequences & Exceptions
Understanding the timeline and consequences of RHQ non-compliance is essential for protecting your Saudi government contract eligibility.
The RHQ Mandate Has Been Active Since January 2024
Since January 1, 2024, Saudi government entities, authorities, institutions and funds (including PIF) generally may not award contracts above SAR 1 million to foreign multinational groups without an RHQ in the Kingdom. The rule does not affect Saudi companies that are not part of a foreign group. There are no fines; the consequence is lost access to government work unless an exception applies.
RHQ Program Timeline
February 2021
RHQ Program Announced
Saudi Arabia announces the Regional Headquarters Program as part of Vision 2030.
January 2024
Mandate Became Effective
Government entities restricted from awarding contracts above SAR 1M to foreign multinational groups without a Saudi RHQ.
November 2025
Etimad Exemption Service
Government entities can request case-specific or time-limited exemptions through Etimad before tendering.
2026
Ongoing Enforcement
Restriction applied by government buyers, with exceptions handled per contract.
Consequences by Scenario
| Scenario | Consequence | Impact |
|---|---|---|
| Foreign Group, No RHQ | Award Restricted | Government contracts above SAR 1M only if an exception applies |
| Branch Only (No RHQ) | Award Restricted | A Saudi branch or subsidiary does not satisfy the RHQ requirement |
| Application in Progress | Still Restricted | A pending application does not lift the restriction by itself |
| RHQ License Lapse | Restricted Until Renewed | Must renew license to maintain eligibility |
| Saudi Company, No Foreign Group | Not Affected | RHQ rule does not apply; normal supplier registration applies |
How Tender Blocking Works
The obligation sits with the government buyer, which applies it within its procurement process:
1. Before Tendering
The contracting entity decides whether the contract is in scope (value above SAR 1M, executed in the Kingdom) and, if it expects to need a non-RHQ supplier, may request an exemption through Etimad before launching the tender.
2. Evaluation and Award
Government entities have reportedly been circulated lists of foreign groups without a Saudi RHQ. An offer from such a group can only be accepted where an exception applies, such as a single compliant offer or a price advantage of at least 25%, and the entity must document the justification.
3. Ongoing Compliance
Licensed RHQs must keep meeting their conditions (operations, staffing). A lapsed or revoked license puts the group back in scope for future awards.
Exceptions & What a Pending Application Changes
No Grace Period for Pending Applications
A submitted RHQ application does not by itself lift the restriction, and there is no exemption a company can file for on its own. If a tender is imminent, ask the contracting entity whether one of the exceptions applies or whether it will request an Etimad exemption for that project.
A Non-RHQ Group Can Be Awarded If:
- ✓The contract is SAR 1M or less
- ✓Only one technically compliant offer is received
- ✓Its best technical offer is at least 25% cheaper than the next best
- ✓The work is executed entirely outside Saudi Arabia
- ✓The buyer obtained an Etimad exemption covering the project
These Do NOT Create an Exception:
- ✗An RHQ application that is still pending
- ✗Having a Saudi branch or trading subsidiary
- ✗Belonging to a particular industry
Exceptions summarized from published adviser commentary on the government contracting rules and the Local Content and Government Procurement Authority's Etimad exemption service. Verify against the current rules and the specific tender documents.
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