Abu Dhabi vs. Riyadh: Competing Models of FDI Growth in the Gulf

Foreign direct investment (FDI) is reshaping the Gulf’s economic future and nowhere is this more evident than in the ongoing race between Abu Dhabi and Riyadh, two cities leading the transformation in the UAE and Saudi Arabia. 

Each capital is pushing a distinct growth model to attract global businesses, investors, and innovators but with very different playbooks. This has made things even more interesting for foreign investors eyeing company formation in the UAE or KSA. 

1. Tax and Incentives – Competing for Global Capital
Abu Dhabi relies on its trusted, low-tax framework. Free zone companies enjoy 0% corporate tax, while mainland entities pay 9% above AED 375,000 in profits. The 5% VAT applies uniformly, but free zone transactions remain exempt.

Riyadh, in contrast, is offering one of the most aggressive SEZ tax regimes globally, 5% corporate tax for 20 years and zero withholding and corporate tax for regional HQs. It’s a bold move to attract global corporations to establish permanent roots in the Kingdom. 

2. Ownership and Legal Confidence
Abu Dhabi’s “positive list” gives foreign investors 100% ownership across 13 key sectors, including ICT and renewable energy, which makes it lucrative for business setup in the UAE. Its stable legal environment and simplified setup costs make it a predictable choice. 

Riyadh’s SEZs, however, provide full foreign ownership and operate under autonomous legal frameworks such as NEOM’s international-style system, offering flexibility but also an evolving regulatory backdrop. 

3. Strategic Focus – Innovation vs. Mega Projects
Abu Dhabi’s economic agenda leans toward advanced manufacturing, Industry 4.0, and sustainability. Riyadh’s Vision 2030 is about scale, building future-focused mega-cities like NEOM and Oxagon, targeting biotech, AI, clean energy, and logistics to transform the Kingdom into a trillion-dollar innovation economy. 

4. Workforce & Residency Policies
Abu Dhabi promotes local participation with Emiratization incentives and 10-year Golden Visas for investors. Riyadh’s SEZs take the opposite route, no Saudization quotas and flexible labor laws, allowing early-stage companies greater breathing room to scale. 

5. Funding & Infrastructure 

Abu Dhabi is fostering SME competitiveness through smart manufacturing incentives and digitization grants. Riyadh’s Saudi Industrial Development Fund (SIDF), however, can finance up to 75% of project value, favoring large-scale industrial players with repayment periods extending up to 20 years. 

 The Bottom Line
Abu Dhabi represents stability, structure, and innovation, appealing to investors who value predictability and strong policy frameworks. Riyadh is ambitious, transformative, and high-reward, designed for investors ready to bet on large-scale growth under Vision 2030. 

Both models point toward a unified regional goal: building globally competitive economies less dependent on hydrocarbons, with infrastructure, innovation, and international business at their core. 

For global investors, the question isn’t which city is better, but which one aligns with their growth philosophy. 

Read the full comparison on our website to explore sector-specific opportunities, FDI incentives, and the best