RIYADH — Saudi Arabia’s National Program to Combat commercial concealment (Tasattur) intensified its efforts last month, conducting 3,785 inspection visits nationwide. These raids led to the identification of 123 potential violations of the Anti-Commercial Concealment Law, with suspected offenders now facing investigation and the possibility of significant penalties. The program aims to ensure a fair and transparent business environment within the Kingdom.
The inspections, which took place across the country, were driven by intelligence gathering and evidence suggesting illicit practices. Authorities are focused on safeguarding the Saudi economy against illegal activities and fostering legitimate business growth, particularly for Saudi nationals. The individuals and entities implicated in these cases have been handed over to the relevant legal authorities for further scrutiny.
Cracking Down on Commercial Concealment in Saudi Arabia
Commercial concealment, known locally as ‘Tasattur,’ involves non-Saudis allowing Saudi nationals to nominally own businesses while retaining the actual control and profits. This practice is illegal as it circumvents Saudization policies and distorts economic competition. The Saudi government has made combating this issue a key priority as part of its Vision 2030 economic diversification plan.
Targeted Sectors and Inspection Focus
The recent inspection campaign specifically targeted sectors identified as being particularly vulnerable to these types of fraudulent arrangements. These included automotive repair services encompassing mechanical, electrical, bodywork, and painting; retail establishments dealing in luxury goods and clothing accessories; as well as serviced apartments.
Other areas of focus were watch retail, restaurants employing service staff, and those involved in general residential construction. According to reports, these sectors presented a higher risk profile based on prior investigations and tip-offs received by the program. The program did not disclose specifics about what triggered the inspections in each area.
Severe Penalties for Violators
The Anti-Concealment Law carries substantial penalties for those convicted of engaging in ‘Tasattur.’ Individuals found guilty could face imprisonment for up to five years, alongside fines reaching up to SR5 million (approximately $1.33 million USD).
Furthermore, the law empowers authorities to seize and confiscate any funds accumulated through illegal means, once a final court ruling has been issued. The penalties extend beyond financial repercussions and include administrative sanctions. These can range from the closure of the implicated business to the revocation of its commercial registration.
Additionally, convicted individuals can be prohibited from conducting any further commercial activity in Saudi Arabia. The authorities also reserve the right to collect outstanding zakat (Islamic alms), fees, and taxes. A key element in deterring this practice is the mandated public announcement of the crime, at the expense of the individual found guilty.
For expatriates involved in commercial cover-up schemes, the consequences are particularly severe. They face deportation from the Kingdom and a permanent ban on future employment within Saudi Arabia. This aspect of the law underscores the government’s commitment to protecting the rights of Saudi businesses and workers.
Broader Impact on Foreign Investment
The crackdown on commercial concealment is also impacting foreign investment dynamics within the Kingdom. While Saudi Arabia actively encourages foreign direct investment, it insists on full compliance with local regulations and transparency in business ownership. The program’s actions show the government’s determination to attract legitimate investment that benefits the Saudi economy.
This enforcement activity is expected to create a more level playing field for businesses operating legally in Saudi Arabia. It aims to curb unfair competition stemming from illicit operations and foster a more trustworthy investment atmosphere. However, some analysts suggest the aggressive enforcement could also create temporary uncertainty for some foreign investors.
The Ministry of Commerce has repeatedly emphasized that the program is not intended to hinder legitimate business, but rather to eliminate practices that undermine the Saudi economy and its national interests. Efforts are being made to educate businesses about the requirements of the Anti-Concealment Law and to facilitate compliance.
The program is closely linked to broader reforms aimed at strengthening governance and reducing opportunities for corruption. This includes digitization of government services and improved mechanisms for reporting potential violations. These measures are said to be intended to create a more transparent and auditable business environment.
Looking Ahead
The National Program to Combat Commercial Concealment has indicated that it will continue its inspection campaigns across various sectors in the coming months. A spokesperson stated the program will likely adopt a more proactive approach utilizing data analytics to identify high-risk businesses. This will involve deeper scrutiny of financial transactions and business relationships.
Future developments will likely center on the outcomes of the ongoing investigations and the imposition of penalties. The program’s success will be measured by its ability to effectively deter commercial concealment and promote genuine economic growth. It remains to be seen how the program will adapt to address evolving tactics used by those attempting to circumvent the law, and what new regulations might be considered to tackle these challenges.
Further monitoring of the program’s impact on the Saudi business landscape and foreign investment flows is warranted.
