Saudi Arabia ... The issuance of a royal order regarding real estate supplies

The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud issued today a royal order exempting real estate supplies made after the enforcement of the provisions contained in this order from value added tax. 

The royal decree also included, according to the Saudi Press Agency, "SPA", the refund of what is paid after the enforcement of the provisions contained in this order in terms of value-added tax on inputs to licensed real estate developers, in accordance with the controls of redemption and related rules approved by the Minister of Finance, Chairman of the Board of Directors of the Authority. General Zakat and Income Tax in coordination with the Minister of Housing.

The royal decree included imposing a tax in the name of "real estate disposition tax" on real estate supplies that take place after the enforcement of the provisions contained in this order, at a rate of 5% of the value of the real estate supply, to be collected upon documenting real estate disposal.

The following is the text of the royal decree

With the help of God Almighty

we, Salman bin Abdulaziz Al Saud

King of the Kingdom of Saudi Arabia

After reviewing the Basic Law of Governance issued by Royal Decree No. (A / 90) dated 27/8/1412 AH.

And after perusal of the Cabinet Law issued by Royal Decree No. (A / 13) dated 3/3/1414 AH.

And after reviewing the Shura Council bylaw issued by Royal Decree No. (A / 91) dated 27/8/1412 AH

And after reviewing the value-added tax system, issued by Royal Decree No. (M / 113) on 11/2/1438 AH, as amended by Royal Decree No. (M / 52) on 4/28/1441 AH.

And after reviewing the Royal Decree No. (A / 638) dated 10/15/1441 AH.

We ordered the following:

First: Exemption of real estate supplies made after the enforcement of the provisions contained in this order from value added tax.

Second: Refund of what is paid after the implementation of the provisions contained in this order from the value of the value-added tax on the inputs to licensed real estate developers, in accordance with the restitution controls and related rules approved by the Minister of Finance, Chairman of the Board of Directors of the General Authority for Zakat and Income in coordination with the Minister of Housing and approved by the Minister of Finance Chairman The General Authority of Zakat and Income Administration is a list - updated periodically - with the names of those developers.

Third: Imposing a tax in the name of (real estate disposal tax) on real estate supplies that take place after the enforcement of the provisions contained in this order, at a rate of (5%) of the value of the real estate supply, to be collected upon documenting real estate disposal.

Fourth: For the purposes of implementing what was stated in items (first) and (third) of this order, the Minister of Finance, Chairman of the Board of Directors of the General Authority for Zakat and Income, determines real estate supplies that are exempt from value-added tax and are subject to real estate tax.

Fifth: The state bears the tax on real estate transactions for no more than an amount of (1.000,000) million riyals from the price of buying the first home for a citizen.

The Minister of Finance and the Chairman of the Board of Directors of the General Authority of Zakat and Income shall approve the necessary controls and procedures for this.

 Sixth: The General Authority for Zakat and Income shall be responsible for managing and collecting the real estate disposal tax, and the Minister of Finance shall issue the Chairman of the Board of Directors of the General Authority for Zakat and Income the necessary decisions, including determining the provisions that apply to this tax in the VAT system to the extent consistent with the nature of This tax.

 Seventh: The Committee for Settlement of Tax Violations and Disputes and the Special Committee for Tax Violations and Disputes - whose formation and competencies are stipulated in Royal Decree No. (M / 113) of 11/2/1438 AH, and the adjudication of violations and disputes arising from the application of the provisions referred to in clause ( Sixth) From this matter.

 Eighth: What is mentioned in Clauses (Six) and (Seven) of this order shall be applied until the real estate disposal tax system is issued and it is acted upon.

 Ninth: The previous items shall be published in the official gazette, and the Minister of Finance shall determine the Chairman of the Board of Directors of the General Authority for Zakat and Income on the date of its implementation, provided that it is following its publication, and not exceeding fifteen days from the date of its issuance.

Tenth: The General Authority for Zakat and Income shall prepare a draft system for taxing real estate disposals in light of what the previous clauses included, and it shall be submitted within a period not exceeding ninety days from the date of this order to complete the necessary legal procedures in this regard.

Eleventh: Our matter is communicated to the competent authorities for approval and implementation.

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