The Riyadh Chamber of Commerce organized a meeting with the Zakat and Income Tax Authority last Wednesday with real estate and businessmen to introduce the mechanism for calculating the value added tax for the real estate sector, where Mr. Hamoud Al-Harbi, Director of Operations Department in the Value Added Tax at the Zakat Authority, provided an explanation of the controls of its application in the interactive presentation he gave for examples of examples and explained how to register in the electronic portal for companies and individuals.
Riyadh Chamber of Commerce.
Amlak Real Estate Newspaper lists samples of the questions answered by Al-Harbi to facilitate and simplify the newspaper's readers and the real estate community.
Is anyone who develops a villa and then sells it taxable?
Yes, if he sells it, it becomes a commercial activity, he must register and file a tax return, and he is taxed if the price exceeds one million.
Is an individual who does not have a commercial registration taxable if he buys and sells real estate, and does he collect the tax from the buyer? <p class="p2
VAT is a system directed to the practice of economic and commercial activity continuously and independently for the purpose of generating income whether the practitioner has a commercial register or an individual, even if he is an individual, he must register through a link on the Authority's website, and registration is by national ID number, and if the amount exceeds 40 million must be reflected in the quarterly tax return.
What is the correct way to calculate the tax for a sale in which there is a quest?
Real estate is a taxable commodity along with its services such as pursuit, maintenance, etc. and the amount paid by the final recipient is taxed at 5%, and each invoice should preferably be separate from the other. What is the correct way to calculate the tax for a sale in which there is a pursuit?
How to calculate the tax for a property that is sold more than once a year?
The 5% is calculated from the value of the property sold at each sale, and is not cumulative, so that each seller recovers the added value they paid from the recipient or buyer.
How is the tax on real estate establishments calculated?
The tax is concerned with economic activity, circulation of goods and sales receipts; not institutions, and the owner of the activity at the inventory must compare his sales with the registration limit; if he finds himself meeting the conditions of value added, he must register and file a tax return. How is the tax calculated for real estate institutions?
Are donations and gifts subject to VAT, especially if they are for associations or charitable organizations?
Gifts and gifts are subject if their value exceeds 50 thousand riyals. Gifts and gifts are subject if their value exceeds 50 thousand riyals.
When developing real estate, how is the tax calculated, is it when the sale is assumed or when the client receives the property after it is completed and emptied?
Value added is governed by the full supply of the commodity by transferring the benefit to the new recipient and he has free disposal of it, once it is transferred to the beneficiary, value added is calculated on it.
Purchasing real estate for endowment or any charitable purpose, is it taxable?
Waqfs have an income-generating investment activity and therefore their purchases and sales are subject to VAT.
What is the role of the Authority in assessing the fair value of real estate under VAT?
Properties appraised by the Saudi Valuers Authority are subject to VAT based on the actual and total final supply, and mostly borne by the consumer or buyer (tax on the final outcome of the property price).
What is the role of the real estate marketer in preserving the rights and resources of the state regarding value added?
The marketer must explain to the buyer, within the specifications of the property and others, the final value of the property in terms of happiness, services and other expenses and goods that are subject to VAT.
If dividends are distributed to shareholders of a company with real estate assets in the form of real estate so that the dividends turn into real estate owned by the shareholder, how is it treated for tax purposes? .
Cash dividends are not taxable, but if they are exchanged to the shareholder for real estate, then the ownership of the real estate is transferred from the company to the shareholder or individual subject to tax.
Is the liquidation of a real estate company taxable?
Yes, it is taxable because the property passed from one entity to another. Yes, it is taxable.
Is mortgaging the land to banks and remortgaging to the first owner taxable?
Mortgaging land to financial institutions is included in financing products and is not taxable.
How is the property management tax calculated?
The revenue and activity of property management is subject to VAT, so that the invoices of the endeavor and its services are separated from the owner's invoices and recorded with the same tax number as the owner because it is a utility owner.
How are conglomerates of accountants and lawyers set up to liquidate estates taxed?
It is based on dealing with the owner of the estate, if it deals with him and issues invoices in the name of the conglomerate, it means it must be registered in the VAT system, but if it deals with individuals, each individual has his own responsibility towards the tax.
If a land is sold in 2015 and emptied in 2018, will it be taxed?
Tax is determined by the complete supply to the buyer, including emptying and transfer of ownership, so if it is emptied in 2018 it is subject to VAT. (And just receiving the payment does not mean the supply has taken place).
Deceased person's land development and investment by his children, how is it taxed?
The children must authorize their representative to register for tax, and all sales, purchases and transfers of property are subject to VAT.
Government entities such as the General Organization for Insurance are taxable Government entities such as the General Organization for Insurance are taxable?
They are treated as a consumer if they buy or sell real estate and are taxed accordingly.
Cases subject to VAT Real estate passing to heirs. Real estate passing to heirs.
Sale of residential land. Sale of residential land.
Property management royalties and revenues. Property management royalties and revenues.
Installment payments, even if remaining for 2018. Installment payments, even if remaining for 2018. Commercial and investment leases. Commercial and investment leases.
Services sold related to the property (maintenance, janitorial, etc.).
Pay the rent in installments (each installment is 5%). Pay the rent in installments (each installment is 5%).
Some cases are not subject to VAT Contracts that were signed before May 30, 2017 and for which no VAT was expected are subject to a zero rate. %.
Person who sells their own residential home. Person who sells their own residential home.
Bank financing and its products. Bank financing and its products.
Mortgaging land to the bank for the purpose of financing and returning it to the owner.
Bank guarantee. Bank guarantee.
Rental of residential units. Rental of residential units.
