Some Saudis allow expats to use their names or licenses — ignoring the law
When foreigners desire to do business in any country, they should take appropriate measures to be aware of its relevant laws and regulations, in order to conduct business properly and avoid doing anything that violates the laws and regulations of such country. They should also obtain the required licenses and permits from the relevant authorities that are necessary to establish the business. Failure to abide by the laws of a country by foreigners or citizens can make them subject to punishments.
Saudi Arabia has enacted laws and regulations, in order to conduct business legally by Saudis and foreigners. However, it is very common in Saudi Arabia that businesses are owned and operated by foreigners but registered in the names of Saudi individuals or entities. Some Saudis allow foreigners to use their names or licenses or entities without any consideration but in most cases Saudis share profits with the foreigners who run, operate and effectively own the businesses. Surprisingly, many Saudis and foreigners are not aware that they are committing a crime under the Anti Covering-up Law and that they are subject to punishment. Even if some of them are aware of the illegality of covering up, they may not be aware of its serious punishment.
Thus, it is important to highlight that the Anti Covering-up Law clearly prohibits a non-Saudi from operating or investing in any activity which he has not been licensed by virtue of the Foreign Investment Law or other regulations. Also, any person, who enables a non-Saudi to invest in any activity which the non-Saudi would otherwise be prohibited to invest in or to operate, whether through the use of his name or license or commercial register or in any other way, shall be considered as covering up under the Anti-Covering-up Law.
The punishment for covering up under the Anti-Covering-up Law is a custodial sentence of no longer than two years and with fine of no more than one million Saudi riyals, or either one of these two sanctions. Further, any party involved in the cover-up may be banned from traveling until a final judgment is delivered in the case. In case a conviction judgment is issued, a non-Saudi party shall be deported from Saudi Arabia and shall not be allowed to return to work thereafter. In addition, the commercial register or the subregister or the license of the Saudi, which registers and permits the activity constituting the subject of the violation, shall be cancelled and the activities shall be liquidated as well as the Saudi party being prohibited from practicing the same activity for a period of no more than five years. The final verdict shall be published in one or more local newspapers at the joint expense of the violators. The zakah, taxes, fees and any other obligations, which have not been collected as a result of the cover-up, shall be collected jointly from the perpetrator of cover-up and the party which has been covered- up.
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