Key Exemptions Under the New RETT Regulations

Saudi Arabia has detailed 21 cases where real estate transactions are exempt from the Real Estate Transaction Tax (RETT). The exemptions, published in the official gazette Umm Al Qura, aim to ease tax burdens for individuals and businesses involved in property transfers.

Significant Exemptions for Families and Charities

The new regulations include exemptions for family-related transfers up to the third degree, such as gifts between great-grandparents, great-grandchildren, and first cousins. Property donations to charitable associations are also covered.

Exemptions for Lease Contracts and Pre-2020 Transactions

Real estate transfers involving lease-to-own agreements and finance leases completed before October 1, 2020, are exempt. Additionally, transactions subject to value-added tax (VAT) before this date are not required to pay the RETT.

Corporate Transactions and Forced Sales

The law provides relief for corporate mergers, acquisitions, and transfers between entities under unified ownership. Transfers involving forced sales or sales to licensed developers for off-plan projects are also exempt from the RETT.

Documentation Requirements and Compliance

The Zakat, Tax, and Customs Authority grants a one-year grace period for documenting pre-2020 transactions. All qualifying transfers must be registered on the real estate transaction portal to remain compliant with the new regulations.

Penalties for Non-Compliance

Violators of the RETT regulations may face fines of up to three times the tax amount for providing false information or evading tax obligations. The government aims to encourage transparency and compliance through these measures.