Saudi Arabia: Real estate transaction tax

Saudi Arabia: Real estate transaction tax

Royal Decree A84, issued 1 October 2020, announces the creation of a new real estate transaction tax to be imposed at a rate of 5% of the value of the real estate supply.

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All real estate transactions that take place after the issue of this new decree are exempt from value added tax (VAT) including:

  • A transfer of ownership
  • The sale of commercial, residential or agricultural real estate
  • The sale of  developed and undeveloped land

Licensed real estate developers will be entitled to recover VAT incurred on purchases of goods and services.

The General Authority for Zakat and Tax will be responsible for managing and collecting the new transaction tax, and the Minister of Finance will decide which VAT regulations will apply to the new real estate transaction tax until specific policies and regulations are drafted.


KPMG observation

This action is an effort to boost the real estate sector, and aims to support citizens in that includes a commitment that the government will bear up to SAR 1 million of the tax liability relating to the purchase of a first home by Saudi nationals.


For more information, contact the head of KPMG’s Global Indirect Tax Services:

Lachlan Wolfers | +852 2685 7791| lachlan.wolfers@kpmg.com

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