The Saudi Arabian Zakat, Tax, and Customs Authority (ZATCA) provided new guidance regarding Real Estate Transaction Tax (RETT) for Build-Own-Operate-Transfer (BOOT) contracts on 25 January 2025.
The rules specify that immovable assets such as machinery and equipment involved in a BOOT project, which belong to the operator but are transferred to the beneficiary at the end of the contract, are not subject to RETT. Additionally, any real estate transfer to a government or public legal entity within Saudi Arabia is exempt from the tax.
In contrast, transfers to private sector beneficiaries are subject to a 5% RETT, unless otherwise exempted under certain regulations. The RETT is calculated based on the property’s fair market value at the time of transfer and must be paid within 30 days. Both the transferor and transferee share joint responsibility for the payment of the tax.
Earlier, Saudi Arabia released updated regulations for its real estate transaction tax (RETT) system, published in the Official Gazette on 11 October 2024.
The new rules implement a 5% tax on all real estate disposals, applying to properties without regard for their condition, form, usage, completion status, or documentation.
The tax will be calculated based on the total value agreed upon by both parties and exclude financing costs from licensed entities, reflecting the fair market price at the time of the transaction.
