ZATCA has opened a public consultation on a proposed classification of Real Estate Transaction Tax violations and penalties. The framework would introduce graduated fines for tax evasion and other breaches, with penalties based on the severity and recurrence of offences.
Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) opened a public consultation on a draft classification of violations and penalties under the Real Estate Transaction Tax (RETT) regime on 3 September 2026.
The proposal, prepared under Article 16 of the RETT Law, aims to establish a consistent framework for determining penalties and ensure proportionality between an offence and the applicable fine.
Comments were invited through the National Competitiveness Center’s Istitlaa platform.
Tax evasion penalties linked to evaded tax
Under the proposed classification, tax evasion would carry a fine of up to three times the amount of the evaded tax. The same maximum penalty would apply to anyone proven to have participated in, assisted or facilitated the evasion.
The fine for tax evasion would be determined using a relative-weight system capped at 100%. The proportion of tax evaded would contribute up to 40% of the total weight, while aggravating circumstances could contribute a further 60%.
Weighting system sets the level of fine
Where the evaded tax represented less than 10% of the total tax due, the corresponding weight would be 0%. The weight would rise to 10% where the ratio was 10% to 25%, 20% where it exceeded 25% but was no more than 50%, 30% where it exceeded 50% but was no more than 90%, and 40% where it exceeded 90%.
A further 30% weight would apply where forged, fabricated, false or incorrect documents, information, statements or records were submitted, or another act was committed with the intention of evading tax. An additional 30% would apply for a repeat tax-evasion violation.
The combined weighting would determine the fine. A total weight below 40% would result in a fine equal to the evaded tax, while a weight of 40% to below 70% would result in a fine equal to twice the evaded tax. A weight of 70% to 100% would result in a fine equal to three times the evaded tax.
Graduated penalties proposed for other violations
For other violations of the RETT Law or its Implementing Regulation, the proposed framework would provide graduated penalties. A first offence would result in a warning, followed by monetary fines for subsequent offences. By the fifth offence, the penalty would reach SAR 50,000 or the amount of tax due, whichever is higher.
For providing incorrect information about a real estate transaction, failing to register a transaction and failing to retain required documents and records, subsequent fines would range from SAR 5,000 to SAR 50,000. Failure to cooperate with ZATCA during audit or inspection procedures, including failing to provide requested information or access to relevant records, would attract fines ranging from SAR 1,000 to SAR 50,000.
Repeat violations defined
A violation would generally be treated as repeated where the same offence was committed within 12 months of the decision imposing the preceding penalty. The proposed maximum penalties were consistent with Article 15 of the RETT Law, which provides for fines of up to three times the evaded tax for tax evasion and up to the greater of the tax due or SAR 50,000 for other breaches.
The consultation will conclude on 3 October 2026.
