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Saudi MCI identifies 7 kinds of Fronting/Concealment Activities

The Saudi Ministry of Commerce point out seven types of tasattur and the violators may be subject to imprisonment of up to five years and/or a fine of not more than five million Saudi riyals,
The Ministry calls for owners of businesses and commercial enterprises to exploit the extended six-month corrective period for violators of the Anti-Commercial Cover-up Law (Tasattur).

The seven classifications of tasattur include the non-Saudi worker of the commercial enterprise pays its owner a monthly or annual lump sum amount; the non-Saudi worker manages transactions of the enterprise’s funds through cash payments, bank deposits, or money transfer within the Kingdom and outside; and the non-Saudi worker keeps in his possession blank documents, checks and contracts duly signed by the owner of an enterprise.

Other kinds of tasattur include existence of a partnership between the owner of the enterprise and non-Saudi worker who does not have an investment license; endorsing a non-Saudi who does not have a foreign investment license, to have a stake in the dividends that are meant to be distributed to the partners of the company and allowing the non-Saudi to determine the means of distribution; hiring of brokers or intermediaries by the establishment’s owner using his commercial register to conclude contracts with other parties or individuals; and the entry of the establishment’s revenues and profits directly into the personal account of a non-Saudi and not in the enterprise’s account.

The ministry already extended the deadline for correcting the status by six months from Aug. 23 to Feb. 16. It also noted that penalties are waived if anti-concealment law violations are corrected by 23 August 2021. Thus, it urged the owners of enterprises to take advantage of the corrective period for violators of the law before the end of its deadline on Feb. 16, 2022 via the ministry’s website mc.gov.sa.

In coordination with The National Program for Combating Commercial Concealment, the ministry notified that it received many correction requests that mostly related to economic activities, such as wholesale and retail trade, accommodation, contracting, food services, transport and storage businesses, and downstream industries.

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