Can an expat run a business under a Saudi citizen’s name in Saudi Arabia? Saudi authorities have made it clear that allowing a non-Saudi to operate a business for their own account using another person’s commercial registration can constitute commercial concealment (Tasattur).
This applies even when the Saudi citizen agrees to the arrangement and receives a fixed monthly payment in return.
Saudi Arabia has strict Anti-Commercial Concealment Law rules designed to prevent businesses from being operated through another person’s name or commercial registration in violation of applicable regulations.
What Is Commercial Concealment (Tasattur) in Saudi Arabia?
Commercial concealment, commonly known as Tasattur, can occur when a Saudi citizen or licensed investor enables another person to conduct an economic activity for their own account when that person is not legally authorized to do so.
One common example is an expatriate independently operating a shop or other business using a Saudi citizen’s Commercial Registration (CR) rather than establishing and operating the business through the required legal channels.
Saudi Ministry of Commerce guidance states that a Saudi is not authorized to enable a non-Saudi to work for their own account through such an arrangement.
Can an Expat Use a Saudi Friend’s Commercial Registration?
An expatriate should not simply use a Saudi friend’s commercial registration or business licence to independently operate a business for their own account.
For example, an arrangement where:
- The business is registered under a Saudi citizen’s name;
- The expatriate actually manages and controls the business;
- The expatriate conducts the activity for their own account; and
- The Saudi receives a monthly payment for allowing the use of their name or CR
can fall within prohibited commercial concealment practices.
Payment is not what determines whether the arrangement is lawful. Allowing the prohibited arrangement without receiving a fee can also raise commercial concealment issues.
Is It Legal If the Saudi Owner Receives a Monthly Fee?
A monthly payment to the Saudi citizen does not make an otherwise prohibited arrangement legal.
The important issue is whether a person who is not legally authorized to conduct the activity for their own account is effectively operating the business through someone else’s registration or licence.
Therefore, simply making an agreement with a Saudi citizen and paying them a fixed amount every month should not be treated as a legal alternative to the required investment, registration and licensing procedures.
What Are the Penalties for Commercial Concealment in Saudi Arabia?
Saudi Arabia imposes significant penalties for violations of the Anti-Commercial Concealment Law.
Depending on the offence and the final judicial ruling, penalties can include:
- Imprisonment for up to five years
- A fine of up to SAR 5 million
- Seizure and confiscation of illicit funds following final judicial rulings
- Closure of the establishment
- Liquidation of the business activity
- Cancellation of the commercial registration
- Prohibition from conducting commercial activities
- Collection of applicable Zakat, fees and taxes
- Public disclosure of the violation
- Deportation of involved non-Saudis and restrictions on returning to Saudi Arabia for work
Saudi authorities continue to conduct inspection campaigns across the Kingdom to identify suspected commercial concealment cases.
Can Expats Legally Own a Business in Saudi Arabia?
Foreign nationals may have legal routes to invest in and operate businesses in Saudi Arabia, subject to the requirements applicable to the investor and business activity.
Instead of using another person’s commercial registration, an eligible foreign investor should follow the applicable investment, commercial registration, licensing and regulatory procedures.
Requirements can differ according to factors such as the business activity, legal structure and applicable investment rules.
This means expatriates interested in starting a business should first determine which legal route applies to their specific situation rather than operating informally under a Saudi citizen’s CR.
How Can an Expat Start a Business Legally in Saudi Arabia?
The exact process depends on the proposed activity and the investor’s circumstances. In general, a prospective foreign investor may need to:
- Determine whether the intended business activity is available to foreign investment.
- Complete the applicable investment registration or authorization requirements.
- Establish the appropriate legal business entity.
- Obtain a Commercial Registration and other required licences or permits.
- Complete relevant tax, Zakat, municipal, labor and other regulatory requirements.
Because requirements can vary considerably between activities, investors should check the latest rules through the relevant Saudi government authorities before establishing or operating a business.
Why Saudi Arabia Is Cracking Down on Tasattur
Saudi authorities actively inspect businesses for suspected commercial concealment.
The National Program for Combating Commercial Concealment works with relevant government authorities to detect violations and verify that commercial establishments comply with Saudi regulations.
The enforcement framework is intended to address concealed commercial activities, protect legitimate businesses and ensure economic activities operate through authorized legal structures.
Frequently Asked Questions
Can an expat open a business in a Saudi citizen’s name?
An expatriate should not operate a business for their own account simply by using a Saudi citizen’s name, Commercial Registration or licence. Such arrangements can constitute commercial concealment when they violate Saudi regulations.
What is Tasattur in Saudi Arabia?
Tasattur refers to prohibited commercial concealment arrangements in which a person enables another person to conduct an economic activity for their own account despite not being legally authorized to do so.
Is it legal to pay a Saudi citizen to use their CR?
Paying a Saudi citizen a monthly or fixed fee does not by itself make the arrangement legal. If the arrangement enables an unauthorized person to conduct business for their own account, it can fall under Saudi Arabia’s commercial concealment rules.
What is the fine for commercial concealment in Saudi Arabia?
Penalties under Saudi Arabia’s Anti-Commercial Concealment Law can include a fine of up to SAR 5 million and imprisonment for up to five years, along with other consequences depending on the case and final judicial ruling.
Can a foreigner legally own a business in Saudi Arabia?
Foreign investors can establish businesses in Saudi Arabia through applicable legal investment and licensing channels, provided they meet the requirements for their proposed activity and business structure.
Final Takeaway
Running a business under a Saudi citizen’s name or Commercial Registration is not a lawful shortcut for an expatriate who is not otherwise authorized to conduct that activity for their own account.
Saudi Arabia treats prohibited arrangements of this kind as commercial concealment (Tasattur) and provides substantial penalties for violations.
Expats who want to establish a business in Saudi Arabia should instead follow the applicable investment, Commercial Registration and licensing procedures so the business operates through an authorized legal structure.
