Certificate of local content: to strengthen the national economy according to Vision 2030
Prepare an extract Certification of local content An essential step on the way Localization of industries and development of national enterprisesThis certificate gives companies significant advantages in return for their commitment to using local components, services and personnel. In line with the objectives Saudi Vision 2030, The state paid special attention to the promotion of local content as a major tributary of the national economy. Hence, this certificate came as an official document that enables enterprises to prove the extent of their compliance with the relevant regulatory controls. As a lawyer specializing in Saudi commercial regulations, I discuss in this article Definition of the certificate, the requirements for issuing it, the steps to obtain it, and the practical challenges that companies may face during its extraction.
Definition of local content certification
A certificate of local content is an official document issued by Local content and Government Procurement Authority, And is the legal reference on which it depends in determining the percentage of local contribution of enterprises within the kingdom. This ratio reflects the volume of the company's spending on national products and services, and the extent of its dependence on Saudi workforce In exchange for expats.
The percentage of local content is calculated through a precise mechanism that includes several key elements, most notably:
- Value Local services and products Involved in the company's operations.
- Ratio Local suppliers Within supply chains.
- Size Saudi employees Compared to the total number of employees at the facility.
- Purchases and spending that are directly reflected in the national economy.
This certificate is of strategic importance because A mandatory condition In many competitions and government contracts, the winning companies are given a prominent competitive advantage by obtaining a higher evaluation in tenders compared to companies that rely more on imports or foreign cadres.
Accordingly, certification of local content is considered not just an administrative procedure, it is An economic and legislative tool It aims to raise the efficiency of government spending, achieve a balance between encouraging investment and attracting foreign capital on the one hand, and support National industry and job localization On the other hand. Thus, this certificate contributes to the promotion of National competitiveness, Establishing the principles of Economic sustainability In line with the objectives of Saudi Vision 2030.
Required documents for issuing a certificate of local content
When applying for a release Certification of local content, The facility is required to prepare and attach a package of statutory documents proving the extent of its contribution to supporting local spending and promoting national industries. The most prominent of these documents are the following:
- Local content measurement model According to the formula approved by the commission.
- Report on agreed actions To measure local content, in accordance with the guidelines and controls issued by the local content authority and government procurement.
- Commercial registration or statutory license Valid for the facility.
- Audited financial statements For the target financial year in measurement, provided that it is certified by an accredited legal auditor.
- Recruitment lists Which shows the ratio of national cadres compared to the total workforce.
- Lists of suppliers and procurement To prove the volume of dealing with local products or services.
- That is Additional documents The authority may request it depending on the nature of the entity's activity or the sector in which it operates.
Thus, these documents are considered the main pillar on which the evaluation and accreditation process is built, to ensure the accuracy of calculating the percentage of local content and granting the certificate in accordance with the regulatory controls.
Steps for extracting local content certification
The process of certification of local content goes through a number of systemic stages that ensure the accuracy of the assessment and the reliability of the results, as follows:
- Registration on the e-portal of the authority:
The facility starts by heading to the official website of Local content and Government Procurement Authority And create an account in the portal dedicated for this purpose.
- Fill out the local content measurement form:
After registration, companies enter the required data into the measurement form, including details of products and services, local expenditure ratios, depreciation of assets, and the size of the national workforce.
- Selection Certified audit office:
The organization or company must determine Certified audit office By the commission, to take over the tasks of verifying the correctness of the data contained in the form.
- Submit the measurement form to Audit Office:
The company sends the measurement form, accompanied by all supporting documents, to the selected Audit Office, where a team of accountants and Legal Consultants conducts audit and verification procedures.
- Preparation and adoption of the audit report:
Following the completion of the audit, the office prepares a detailed report containing the results of the examination and evaluation, and submits this report directly to the authority for consideration and approval.
- Issuing a certificate of local content:
As soon as the report is approved by the authority, a certificate of local content is issued to the establishment specifying its validity period, provided that the establishment is obliged to provide Periodic reports Demonstrate continued compliance with local content requirements throughout the validity period of the certificate.
Challenges Companies to obtain certification of local content
Challenges facing companies in obtaining local content certification
Despite the strategic importance of certification of local content, many companies face a host of challenges when applying for its extraction. This is mostly due to limited internal financial and accounting expertise, or to poor awareness of the relevant regulatory requirements. The most prominent of these challenges are:
- Multiple procedures and many required documents:
The establishment has to provide a wide range of documents to prove the proportion of local content, which may burden small or medium-sized companies that lack a specialized management structure.
- Poor knowledge of certificate requirements and its importance:
Some companies face a lack of familiarity with the regulatory controls and the mechanism for calculating local content, which negatively affects their readiness to submit and leads to delays or rejection of their application.
Given these challenges, it is recommended that companies use Audit offices approved by the authority such as Al Sudais office, Due to her experience in overcoming obstacles and providing the necessary professional support to ensure that the requirements of the certificate are met in accordance with the statutory frameworks.
Contact Al Sudais office to get the local content certificate
In AlSudais legal accounting office, We put our experience and competence at your service to be your reliable partner in managing your financial affairs and complying with regulations. We are aware of the challenges faced by small businesses and entrepreneurs at the beginning of their projects, that's why we offer integrated accounting and legal services At Reasonable Prices, with a team with years of experience and professional certificates accredited locally and internationally, to ensure that you get a high-quality service that meets your needs accurately.
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