What UAE Companies Should Know About Saudi Arabia’s Public Contract Exemptions.
Dubai: Days after Saudi Arabia announced exceptions to its regional headquarters requirement, questions remain about how the updated rules will work in practice and what they mean for foreign companies — including many based in the UAE — bidding for Saudi government projects.
The updated framework does not eliminate the regional headquarters policy introduced in early 2024. Rather, it clarifies the circumstances under which Saudi government entities can approve contracts with foreign companies that do not maintain a regional HQ in the Kingdom.
The change primarily impacts international firms, including those based in the UAE, which were previously excluded from Saudi government tenders unless they relocated their regional headquarters. Saudi authorities say the revised approach aims to safeguard public spending efficiency and ensure the timely delivery of strategic projects.
What has changed
Under the rule introduced in early 2024, Saudi government entities were barred from contracting with foreign companies whose regional headquarters were located outside the Kingdom. That restriction has now been eased.
Government bodies can now request exemptions, allowing them to work with foreign companies and institutions without a Saudi regional HQ, provided certain conditions are met.
Who manages exemptions
The Local Content and Government Procurement Authority has informed government entities that exemption requests must be submitted digitally, either before a tender is launched or prior to issuing a direct contract.
Requests are reviewed by a designated committee and can cover:
- A specific project
- A group of projects
- A defined time period
Two official circulars provide guidance on how requests should be submitted and how existing contractual cases are handled under the revised framework.
Key role of the Etimad platform
Exemptions are handled through the Etimad Platform, the Ministry of Finance’s digital system for managing budgets, tenders, and government contracts.
Tenders issued via Etimad are eligible for the exemption process. Projects launched prior to the platform rollout, or outside its scope, continue to follow previous procedures.
Saudi authorities say the platform promotes transparency, efficiency, and digital transformation in public procurement.
When foreign bids are accepted
Foreign companies without a regional HQ are not prohibited from participating in Saudi tenders, but their bids are only accepted in specific cases:
- When only one technically compliant bid is received
- When the foreign bid is the best offer and at least 25% cheaper than the next competitor
- Projects valued at SAR1 million ($267,000) or less are fully exempt from these restrictions
Why this matters for UAE firms
Many UAE-based companies serve Saudi clients without relocating their regional headquarters. The revised rules give Saudi entities greater flexibility to access specialised technical expertise or more competitive pricing when needed.
Saudi authorities said in January that more than 700 international companies have already established regional headquarters in the Kingdom. The previous policy had prompted some multinationals to restructure, including creating parallel headquarters in both Dubai and Riyadh.
The revised approach maintains the regional HQ policy but allows exceptions when project needs or cost considerations justify them.
