In light of the spread of commercial concealment acts and the multiplicity and diversity of its forms (1), the Kingdom has been concerned with combating the crime of commercial concealment due to its significant impact on the national economy, as it leads to disruption of the distribution of resources through unfair competition and to an increase in the unemployment rate, in addition to the increase in illegal operations in light of unregulated commercial activities, as these companies often evade taxes (2), which would affect economic development. Therefore, the Kingdom has been keen to put in place many decisions, instructions and regulations to confront this crime and put in place the controls that govern it to eliminate the economic ambiguity left by the crime of commercial concealment. It has issued several regulations in this regard, the latest of which is the Anti-Commercial Concealment Law issued by Royal Decree No. (M/4) dated 1/1/1442 AH.
The Meaning of Commercial Concealment
Scholars have defined commercial concealment as a hidden contract or arrangement between two parties in which a Saudi national or a resident legally permitted to engage in commercial activities allows a foreign person—whether natural or legal—to use his name to carry out commercial activities that the law prohibits the foreigner from engaging in, for a particular purpose (3).
Meanwhile, the regulator defined it in Article (2) of the Anti-Commercial Concealment Law issued pursuant to Royal Decree No. (M/4) dated 1/1/1442H as:
“An agreement or arrangement through which one person enables another non-Saudi person to engage in an economic activity in the Kingdom for which he is not licensed, using the license or approval issued to the concealer.”
The Parties to the Crime of Commercial Concealment
The crime of commercial concealment requires two parties: the concealer and the concealed person.
- The concealer: the person, natural or legal, who enables another to engage in the prohibited economic activity. The concealer may be a Saudi or a foreigner, as foreigners may also be granted licenses to engage in certain economic activities, although the concealer is often a Saudi national.
- The concealed person: the person who practices the economic activity prohibited to him under the law, either because the activity is prohibited to him and others and no license may be issued for it, or because he does not hold a legal license to practice it. The concealed person may also be a natural or legal person (4).
Criminalized Forms of Commercial Concealment
The regulator considers multiple forms to constitute crimes punishable by law:
- A person enabling a non-Saudi to engage—on his own account—in an unlicensed economic activity in the Kingdom, including enabling him to use: his name, license, approval, commercial register, trade name, or similar documents.
- A non-Saudi engaging in an unlicensed economic activity on his own account in the Kingdom through the person who enabled him.
- Participation in committing either of the two crimes mentioned in paragraphs (a) and (b) of this Article. A partner in the crime includes anyone who incites, assists, or advises in its commission with knowledge thereof, whenever the crime is completed or continues based on such incitement, assistance, or advice.
- Obstructing or preventing those charged with implementing the provisions of the Law from performing their duties by any means, including failure to disclose information or providing incorrect or misleading information (5).
The following are also considered violations punishable under the Law:
- Any establishment granting a non-Saudi, unlawfully, tools that lead to absolute control over the establishment.
- A non-Saudi unlawfully possessing or using tools that lead to absolute control over the establishment.
- The establishment using, in its dealings related to its economic activity, a bank account other than its own.
The Implementing Regulations specify the provisions related to this Article, taking into account cases where such granting of tools or possession thereof occurred in good faith (6).
From the foregoing, it is clear that acts of commercial concealment are not of one degree of severity. Their consequences vary in nature, severity, and components, which necessitates variation in penalty—precisely what the regulator has done as explained above (7).
Elements of the Crime of Commercial Concealment
The crime of commercial concealment is composed of two elements: a material element and a moral (mental) element.
- The Material Element
The material element consists—according to the Law—of the concealer enabling the concealed person to engage in an economic activity for which he is unlicensed, on his own account. Thus, the material element is not complete without the presence of several material components: Enabling, Practicing, and Absence of authorization (lack of license).
The First Component: Enabling
Enabling may take one of two forms:
- Enabling a non-Saudi to engage in an unlicensed economic activity on his own account in the Kingdom.
- Enabling a non-Saudi to use the concealer’s name, license, approval, or commercial register.
These two forms were stated in Article Three of the Anti-Commercial Concealment Law (8).
Article Two of the Implementing Regulations clarifies the tools and methods that constitute enabling, stating:
“Without prejudice to the Foreign Investment Law and related laws, the following are considered tools that lead to absolute control over the establishment and may not be granted to an unlicensed non-Saudi, nor may he possess or use them unlawfully: any contractual or non-contractual arrangement or procedure that enables him to exercise the actions and enjoy the rights and powers granted to owners or partners of the establishment, as applicable. This includes:
- Revenues, profits, or contract proceeds of the establishment being transferred—directly or indirectly—to the non-Saudi’s account instead of the establishment’s account, including that he collects proceeds or returns from the sale, transfer of assets, or liquidation of the establishment on his behalf, or receives a variable financial return inconsistent with the nature of his duties, subject to employment contracts that entitle workers to a share of profits or revenues.
- Financing the establishment or any of its economic activities.
- Authority to appoint or dismiss the establishment’s manager.
- Possession of commercial papers or blank-signed documents/contracts of the establishment.
- Approving partner profit distributions and determining their method.”
The Second Component: Practicing
Practice by the non-Saudi constitutes the second component and is set out in Article (3) of the Law.
For practice to be established:
- The practitioner must be a non-Saudi (natural or legal person),
- The activity must be unlicensed,
- The practice must occur through enabling by the concealer, and
- The practice must occur within the Kingdom (9).
The Third Component: Absence of License
Article (3)(a, b) of the Law states:
“It shall constitute a crime punishable under the Law to commit any of the following:
- A person enabling a non-Saudi to engage—on his own account—in an unlicensed economic activity in the Kingdom, including enabling him to use: his name, license, approval, commercial register, trade name, or the like.
- A non-Saudi engaging—on his own account—in an unlicensed economic activity in the Kingdom through the enabler.”
From the above, it is evident that either the non-Saudi himself is practicing an unlicensed economic activity, or the license exists only for the concealer, who allows the non-Saudi to use it.
- The Moral (Mental) Element
The moral element takes the form of general criminal intent—knowledge and will directed toward the material aspects of the crime. The crime of commercial concealment is an intentional crime; the accused must have known, at the time of commission, the facts and conduct of the incident, and his will must have been directed toward committing the act and achieving the result.
Proving the Crime
Crimes and violations set out in the Anti-Commercial Concealment Law may be proven by all legally recognized means of proof, including electronic evidence (10).
Penalties
The regulator prescribed penalties for crimes and violations under Chapter Four of the Law. Article Nine states:
“Without prejudice to any penalty prescribed under any other law, anyone who commits any of the crimes stated in the Law shall be punished with imprisonment for a period not exceeding (five) years and a fine not exceeding (five million) riyals, or either of these penalties. When determining the penalty, regard shall be given to: the size of the economic activity subject to the crime, its revenues, the duration of the activity, and the consequences of the crime.
In case of recurrence, the penalties prescribed for the crimes under the Law shall be doubled. A person is deemed a recidivist if convicted by a final judgment of any of the crimes within (three years) from the date of the previous judgment.
The criminal court may reduce the penalties prescribed under the Law if the defendant, after the Ministry becomes aware of the crime, voluntarily provides evidence or information that could not otherwise have been obtained and that was relied upon to prove the crime.”
Article (14) of the Law also provides the penalty for violations:
“Without prejudice to any penalty prescribed under any other law, anyone who commits any of the violations stated in Article (4) of the Law shall be punished by one or both of the following:
A fine not exceeding (five hundred thousand) riyals …” This is in addition to consequential and supplementary penalties.
Sources:
- Dr. Fawaz bin Khalaf Al-Luwaihiq Al-Mutairi, The Crime of Commercial Concealment in the Saudi Legal System: An Analytical Comparative Study, published in the Arab Journal for Security Studies, Issue (39) for the year 2023, p. 6. Published on the website journals.nauss.edu.sa, access date 25/10/2025 at 14:34.
- Falih Saeed Al-Shahrani, Commercial Concealment and Its Impact on Economic Growth: An Applied Study in the Kingdom of Saudi Arabia, The Comprehensive Electronic Multidisciplinary Journal, Issue (79) for January 2025. Published on the website fsf1402@hotmail.com..pdf, access date 25/10/2025 at 15:27 in the afternoon.
- Amal Ibrahim Al-Dubasi, Commercial Concealment: A Jurisprudential and Regulatory Study, Al-Adl Journal in Riyadh, Issue (82), p. 12.
- Dr. Fawaz bin Khalaf Al-Luwaihiq Al-Mutairi, The Crime of Commercial Concealment in the Saudi Legal System: An Analytical Comparative Study, published in the Arab Journal for Security Studies, Issue (39) for the year 2023, previously cited reference, p. 7.
- Article (3) of the Anti-Commercial Concealment Law issued pursuant to Royal Decree No. (M/4) dated 1/1/1442 AH.
- Article (4) of the Anti-Commercial Concealment Law issued pursuant to Royal Decree No. (M/4) dated 1/1/1442 AH.
- Dr. Fawaz bin Khalaf Al-Luwaihiq Al-Mutairi, The Crime of Commercial Concealment in the Saudi Legal System: An Analytical Comparative Study, published in the Arab Journal for Security Studies, Issue (39) for the year 2023, previously cited reference, p. 8.
- Dr. Fawaz bin Khalaf Al-Luwaihiq Al-Mutairi, The Crime of Commercial Concealment in the Saudi Legal System: An Analytical Comparative Study, published in the Arab Journal for Security Studies, Issue (39) for the year 2023, previously cited reference, p. 13.
- Dr. Fawaz bin Khalaf Al-Luwaihiq Al-Mutairi, The Crime of Commercial Concealment in the Saudi Legal System: An Analytical Comparative Study, published in the Arab Journal for Security Studies, Issue (39) for the year 2023, previously cited reference, p. 14.
- Article (7) of the Anti-Commercial Concealment Law issued pursuant to Royal Decree No. (M/4) dated 1/1/1442 AH.
