The Zakat, Tax, and Customs Authority (ZATCA), on 3 May, 2024, unveiled significant amendments to the real estate transaction tax (RETT) regulations, marking a pivotal shift in property transaction dynamics.

The Key changes include:

  • Expanded Exemption Criteria
    Amendments to Article 3(a)(14) of the RETT regulations require properties transferred from individuals to companies to be recognised as assets in the books of accounts before the effective date.
    Additionally, individuals must be shareholders in the company at the time of asset recognition, irrespective of their status during the title transfer.
  • Broader Scope for In-Kind Subscriptions
    Changes to Article 3(a)(15) now allow for RETT exemption on in-kind subscriptions to any real estate investment fund, regardless of its purpose.
    Former restrictions on funds leasing real estate and the requirement for in-kind subscription only at fund establishment have been removed, aligning with Capital Market Authority (CMA) guidelines.
  • Qualification Criteria
    To qualify for the exemption, fund units or shares corresponding to real estate disposal must be retained until the fund’s termination or liquidation, or for at least five years from registration or ownership, whichever comes first.

    Notably, changes in shareholding percentage due to public share offerings are exempt from this requirement.

These amendments by ZATCA offer greater flexibility and clarity for property owners and investors, making real estate transactions in Saudi Arabia more efficient and attractive.