{"id":74661,"date":"2025-02-19T13:15:59","date_gmt":"2025-02-19T10:15:59","guid":{"rendered":"https:\/\/amlak.net.sa\/?p=74661"},"modified":"2025-11-25T23:30:27","modified_gmt":"2025-11-25T23:30:27","slug":"%d8%a8%d8%a7%d9%84%d8%aa%d9%81%d8%a7%d8%b5%d9%8a%d9%84-%d8%aa%d8%b9%d8%b1%d9%81-%d8%b9%d9%84%d9%89-%d9%85%d8%b4%d8%b1%d9%88%d8%b9-%d8%a7%d9%84%d9%84%d8%a7%d8%a6%d8%ad%d8%a9-%d8%a7%d9%84%d8%aa%d9%86","status":"publish","type":"post","link":"https:\/\/amlak.net.sa\/en\/74661\/","title":{"rendered":"Details... Learn about the draft executive regulations of the real estate transaction tax system"},"content":{"rendered":"

As part of efforts to organize Real estate transaction tax<\/a><\/strong> To promote transparency in real estate transactions, it called for Zakat, Tax and Customs Authority<\/a> <\/strong>Financial and regulatory authorities are invited to submit their comments on Draft Executive Regulations for the Real Estate Transactions Tax<\/a><\/strong> which I posted on the platform Reconnaissance<\/a>...during the period from February 15 to March 15, 2025.<\/p>\n

Objectives of the Draft Executive Regulations for the Real Estate Transactions Tax<\/span><\/h4>\n

The draft implementing regulations for the system aim to Real estate transaction tax<\/a> which consists of 15 articles <\/strong>To clarify all definitions related to the real estate transaction tax and to specify the scope of the tax, its liability, payment, and exemptions, while establishing criteria and regulations for such exemptions, in addition to specifying the provisions related to the refund of taxes paid in excess or in error, and the Authority\u2019s right to reassess the tax calculation.<\/p>\n

Details and Scope of Taxation<\/span><\/h4>\n

According to the proposed bill, a real estate transaction tax of 5% is imposed on any real estate transaction, regardless of the property\u2019s status, form, or use at the time of the transaction, whether the transaction involves the entire property or a portion thereof, and whether the property is individually owned or held in common. The tax is calculated based on the total value of the real estate transaction, including any financial or in-kind consideration. The total value also includes permits, original and derivative real rights, as well as any other rights closely associated with the property.<\/p>\n

Calculation of Tax Based on Fair Market Value<\/span><\/h4>\n

The draft regulation clarifies that the tax is calculated based on the fair market value of the property as of the date of the transaction, whether it is owned directly or indirectly by companies. In cases where the property is disposed of by granting a right of usufruct for a term exceeding 50 years, the tax is calculated based on the present value of the fair market value of the right of usufruct on the date of disposal, or on the present value of the total consideration agreed to be paid, whichever is higher. As for real estate dispositions related to build-own-operate-transfer (BOOT) projects, the tax is calculated based on the fair market value of the property as of the date of the actual transfer of ownership to the transferee.<\/p>\n

Definition of a Real Estate Company and Criteria for Taxation<\/span><\/h4>\n

The draft law states that the definition of \u201creal estate company\u201d includes any company, fund, or entity that owns real estate within the Kingdom, either directly or indirectly, with the aim of generating revenue from its sale or lease, provided that the fair market value of such real estate represents at least 50% of the total value of its assets as of the date of transfer of the share in the company. Furthermore, the transfer of rights or benefits associated with a convertible debt or any financial asset that grants its holder the option to acquire a direct or indirect interest in a real estate company or real estate property is considered a taxable real estate transaction. However, acquiring new shares in a real estate company through a capital increase is not considered a real estate transaction, nor is the division of real estate in accordance with the procedures of the competent authorities considered a taxable transaction, as the tax on real estate transactions is imposed only once.<\/p>\n

Exemptions from Real Estate Transaction Tax<\/span><\/h4>\n

The draft regulation specifies several cases in which real estate transactions are exempt from tax, including a transaction carried out through the contribution of an in-kind share by an individual to the capital of a company or institution within the Kingdom, provided that the shares or interests corresponding to the in-kind contribution are not disposed of for at least five years from the date of their registration, and that the company maintains financial statements audited by a certified external auditor throughout this period.<\/p>\n

The exemptions also include real estate transactions in which one of the parties is a foreign government, an international organization, a diplomatic or military body, or a member of the diplomatic, consular, or military corps accredited to the Kingdom, provided that reciprocity applies. Furthermore, in-kind contributions to the capital of a real estate investment fund are exempt, in accordance with the regulations and rules of the Capital Market Authority, provided that the fund units corresponding to the in-kind contribution are not disposed of until the fund\u2019s termination or liquidation, or until five years have elapsed since their registration, whichever comes first.<\/p>\n

The exemptions also include real estate transactions carried out for the purpose of using the property as collateral for financing or credit from a licensed entity, provided that ownership of the property is not permanently transferred to the lender or a third party. In addition, real estate transactions carried out pursuant to a compulsory sale order issued by a competent court are exempt in cases of liquidation and administrative liquidation, in accordance with the Bankruptcy Law and its implementing regulations.<\/p>\n

Special Exemptions for Real Estate Developers<\/span><\/h4>\n

The regulation exempts real estate transactions conducted by a real estate developer licensed to engage in off-plan sales and leasing, provided that several conditions are met, including:<\/p>\n

The real estate developer must be licensed in accordance with the laws and regulations in effect in the Kingdom at the time of the transaction.
\nThe property subject to the transaction must be designated for an off-plan sales project and must have obtained a license from the competent authority on or before the date of the transaction.
\nIf a licensing decision has not been issued prior to the transaction, the transacting party is granted a 90-day grace period to submit the application, provided that the tax due is paid or a cash or bank guarantee equivalent to the amount of the tax is provided.<\/p>\n

The exemption also covers real estate transactions conducted for the benefit of a company or investment fund established in the Kingdom, provided that all shares of the company or units of the fund are owned\u2014directly or indirectly \u2014by a public, private, or joint waqf, and that the waqf\u2019s ownership percentage in the company or fund remains unchanged for at least five years from the date of the real estate transaction.<\/p>\n

To view the draft implementing regulations for the Real Estate Transactions Tax Law... Click here here\u00a0<\/a><\/strong><\/h4>","protected":false},"excerpt":{"rendered":"

Reading time: <\/span> 3<\/span> Minutes<\/span><\/span>As part of efforts to regulate real estate transaction tax and enhance transparency in real estate transactions, the Zakat, Tax and Customs Authority (ZTA) invited financial and regulatory authorities to submit their comments on the draft executive regulations for real estate transaction tax, which it launched on a consultation platform, during the period from February 15 to March 15, 2025. Objectives of the Draft Executive Regulations for Real Estate Transaction Tax The draft executive regulations aim to... Read 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