The Saudi Arabian Zakat, Tax, and Customs Authority (ZATCA) has released the draft regulations for the Real Estate Transaction Tax (RETT) for public consultation on 15 February 2025.
The draft regulations update the rules for real estate transactions in Saudi Arabia. Taxpayers can submit feedback until 15 March 2025, as part of the public consultation process.
This follows the approval of the RETT Law under Royal Decree No. M/84, published in the Official Gazette on 11 October 2024.
The law is set to take effect on 9 April 2025, giving a 180-day period for implementation.
Earlier, the ZATCA provided 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.
