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 of calculating the value-added tax for the real estate sector, where Mr. Hamoud Al-Harbi, Director of the 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 of examples of examples and explained how to register in the electronic portal for companies and individuals.<\/b><\/p>\n
Amlak Real Estate Newspaper provides samples of the questions that Al-Harbi answered to facilitate and simplify the newspaper's readers and the real estate community.<\/b><\/p>\n
Is anyone who develops a villa and then sells it liable for tax?<\/strong><\/p>\n 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.<\/p>\n \u00a0Is an individual who does not have a commercial register liable for tax if he buys and sells real estate, and does he collect the tax from the buyer?<\/strong><\/p>\n Value-added tax is a system that is geared to the exercise of economic and commercial activity in a continuous and autonomous manner\u00a0 <\/span>For the purpose of finding income, whether the practitioner has a commercial registration 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, this must be reflected in the quarterly tax return.<\/p>\n What is the correct way to calculate the tax for a sale in which there is a quest?<\/p>\n Real estate is considered a taxable commodity along with its services such as quest, maintenance and others, and the amount paid by the final recipient is taxed at 5%, and it is recommended that each invoice be separate from the second.<\/p>\n How do I calculate the tax for a property that is sold more than once a year?<\/strong><\/p>\n The 5% is calculated from the value of the property sold in each sale, and it is not cumulative, so that each seller recovers the added value they paid from the recipient or buyer.<\/p>\n How is the tax on real estate organizations calculated?<\/p>\n The tax is concerned with economic activity, the circulation of goods and sales receipts; not institutions, and the owner of the activity 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.<\/p>\n Are gifts and donations subject to VAT, especially if they are for charitable organizations?<\/strong><\/p>\n Gifts and gifts are subject if their value exceeds 50,000 SAR.<\/p>\n When developing real estate, how is the tax calculated, is it when a sale is assumed or when the client receives the property after it is completed and emptied?<\/strong><\/p>\n Value-added is governed by the complete supply of the commodity, as the benefit is transferred to the new recipient and he has free disposal of it, once it is transferred to the beneficiary, value-added is charged to him.<\/p>\n Buying real estate for endowment or any charitable purpose, is there a tax on it?<\/strong><\/p>\n Endowments have an income-generating investment activity and therefore their purchase and sale are subject to VAT.<\/p>\n What is KDIPA's role in assessing the fair value of real estate under VAT?<\/strong><\/p>\n Properties assessed by the Saudi Residents 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 price of the property).<\/p>\n What is the role of the real estate marketer in preserving the rights and resources of the state in terms of value added?<\/strong><\/p>\n 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.<\/p>\n 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?<\/strong><\/p>\n Cash dividends are not taxable, but if they are exchanged for real estate, the ownership of the real estate is transferred from the company to the shareholder or individual and is subject to tax.<\/p>\n Is the liquidation of a real estate company taxable?<\/strong><\/p>\n Yes, it is taxable because the property has moved from one side to the other.<\/p>\n Is mortgaging land to banks and returning the mortgage to the first owner taxable?<\/strong><\/p>\n Mortgaging land to financial institutions is included in financing products and is not taxable.<\/p>\n How is the property management tax calculated?<\/strong><\/p>\n 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 a tax number like the owner because it is a utility owner.<\/p>\n How are conglomerates of accountants and lawyers set up to liquidate estates taxed?<\/strong><\/p>\n Depending on the dealings with the owner of the estate, if he deals with him and issues invoices in the name of the conglomerate, it means that he must be registered in the VAT system, but if the dealings are with individuals, each individual has his own responsibility towards the tax.<\/p>\n If land was sold in 2015 and emptied in 2018, will it be taxed?<\/strong><\/p>\n The tax is determined by the complete supply to the buyer, including emptying and transfer of ownership, so if the emptying takes place in 2018, VAT is due. (And just receiving the payment does not mean that the supply has taken place).<\/p>\n Development and investment of a deceased person's land by his\/her children, how is it treated for tax purposes?<\/strong><\/p>\n Children must authorize their representative to register for tax, and all sales, purchases and transfers of property are subject to VAT.<\/p>\n Do government entities such as the General Insurance Organization (GIO) have a tax?<\/strong><\/p>\n You are treated as a consumer if you buy or sell real estate and are taxed accordingly.<\/p>\n Cases subject to\u00a0<\/b>Value Added Tax (VAT)<\/b><\/p>\n Real estate passed on to heirs.<\/p>\n Selling residential land.<\/p>\n Property management revenue.<\/p>\n Supply the installments, even if they are remaining for 2018.<\/p>\n Commercial and investment leases.<\/p>\n Services sold related to the property (maintenance, janitorial, etc.).<\/p>\n Pay the rent in installments (each installment has a value of 5%).<\/p>\n Some cases are not subject to <\/b>Value Added Tax (VAT)<\/b><\/p>\n Contracts that were signed before May 30, 2017 and did not anticipate VAT are subject to the zero rate%.<\/p>\n A person who is selling their own residential home.<\/p>\n Bank financing and its products.<\/p>\n Mortgage the land to the bank for the purpose of financing and return it to the owner.<\/p>\n Bank guarantee.\u00a0 <\/span><\/p>\n Rental of residential units.<\/p>","protected":false},"excerpt":{"rendered":" Reading time: <\/span> 3<\/span> Minutes<\/span><\/span>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 the Operations Department in VAT at the Zakat Authority, explained the controls of its application in the interactive presentation he gave to examples of examples, explaining how to register in the portal ... 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