The General Authority for Zakat and Income has reiterated its confirmation that the leasing or licensing of residential property is exempt from value-added tax.

Meanwhile, the General Authority for Zakat and Income Tax confirmed that the real estate sector as a whole is subject to a 5.1% value-added tax, This came during a workshop organized by the General Authority for Zakat and Income at its headquarters in Riyadh on value-added tax for real estate companies operating in Saudi Arabia.

The Authority clarified, according to a press release, that the sale of a permanent residential property used by the owner or by a close relative such as a son, brother, spouse, or son-in-law, is considered outside the scope of value-added tax, as the sale in this case is not considered an economic activity as defined in the implementing regulations.

As for real estate-related services, the Authority confirmed that they are subject to value-added tax at the standard rate of 5%. These services include, for example, granting, transferring, or relinquishing any right in the property, and any contractual right that can be exercised over the property, such as the leasing and renting of hotel rooms or furnished serviced suites.

In addition to the construction, demolition, conversion, expansion, or maintenance of real estate, and services provided by real estate agents, auctioneers, architects, surveyors, engineers, and others engaged in real estate-related work.