<The Board of Directors of Zakat, Tax and Customs Authority has approved the executive regulations of the Real Estate Transaction Tax System, which aims to regulate the taxation of real estate transactions in the Kingdom, in line with the Saudi Vision 2030. This regulation is a major step towards modernizing the Kingdom's tax systems, while emphasizing the application of justice at all stages of real estate transactions.

5% tax on real estate transactions:

<The Executive Regulations of the Real Estate Disposal Tax System stipulates that a 5% tax is imposed on any real estate disposal, regardless of the condition, form, or use of the property at the time of the disposal. Whether the disposal involves a whole or partial property, segregated or communal, completed, under construction or even on the map, whether the disposal is officially documented or not. As for the total value of the real estate disposal, it is calculated based on any consideration agreed upon by the concerned parties, whether in cash or in kind, provided that it is in line with the fair market value of the property.

Real estate transactions that include tax exemptions:

The regulation has set clear criteria and controls related to the cases of total exemption from taxation. These exemptions include real estate transactions that take place within the framework of the division of estates in accordance with the laws in force in the Kingdom, in addition to transactions made in favor of public, private or joint endowments registered with the authorities concerned with endowments. Exemptions have also been specified for real estate transactions between legally licensed charitable associations, provided that their activities are aimed at achieving a public interest. In addition, exemptions have been included for real estate transactions made for the benefit of public entities or projects of public benefit, such as ministries, government bodies and projects that serve the public interest.

Real estate dispositions under financing contracts:

<With regard to real estate transactions that take place within the framework of Murabaha and Ijara contracts for the purpose of ownership or financial leasing, the regulation stipulates that the tax is imposed only on the first transaction resulting from these contracts, from the disposer to the licensed financing entity. In addition, clear conditions for calculating the tax in cases of real estate included in the financing contracts have been specified.

<This regulation contributes to a significant development in the tax system in Saudi Arabia, as it strengthens the control of real estate transactions and clearly defines the exemptions for charitable and public benefit projects and activities. With these amendments, the Kingdom is moving closer to achieving its goals of enhancing transparency and developing the real estate sector in line with Vision 2030.