Saudi Gazette report

RIYADH — The Communications and Information Technology Committee at the Riyadh Chamber has warned that local IT companies are facing unfair competition from foreign firms operating in Saudi Arabia from abroad without commercial registrations, licenses, or headquarters.

These companies offer low prices that give them an unlawful advantage and harm licensed businesses.

The committee also cautioned about the security risks of dealing with such firms, including the potential for data leaks.

Suleiman Al-Ajlan, chairman of the committee, said these companies do not bear the financial obligations that licensed firms — Saudi or foreign — must meet, such as taxes, zakat, government fees, and Saudization requirements.

He noted that this has negatively impacted sales for local companies that cannot compete with artificially low prices, resulting in economic drawbacks such as capital outflow, weakened support for small and medium enterprises, and setbacks in Saudization and the hiring of national talent.

Al-Ajlan stressed that Saudi Arabia’s large and open market is an attractive environment for these companies. "Some may be unaware of the legal mechanisms available to enter the market officially, while others deliberately exploit loopholes, such as contacting clients through social media, sending representatives on visit, tourist, or Umrah visas for business purposes, or promoting their companies at trade fairs by posing as visitors."

He added that while government entities do not directly deal with these firms, some licensed companies subcontract projects to unlicensed foreign operators, which constitutes a clear violation of regulations.

He warned that working with such companies exposes data to risks of leakage, sale, or misuse in unauthorized commercial activities or even for more dangerous purposes.