Saudi Arabia: Expanded exemptions from real estate transaction tax
Saudi Arabia: Real estate transaction tax
Amendments to the regulations implementing the real estate transaction tax have been approved by the General Authority of Zakat and Tax (GAZT).
Ministerial Resolution No. 2229 (effective 22 January 2021) provides for additional exemptions (partial or full exemptions) from the real estate transaction tax for certain transactions.
Amendments concern an exemption or exclusion from the real estate transaction tax for property disposed of as an in-kind contribution to the capital of a company by any person, provided that corresponding shares are not disposed of for five years. The amended section expands the provision to apply to in-kind contributions to the capital of:
- Joint stock companies
- Limited liability companies
- Partnerships or limited partnership companies
These companies must maintain financial statements audited by a certified external auditor throughout the five years, measured from the date of receipt of these shares.
Other amendments address new transactions that would be exempt from the real estate transaction tax under certain conditions.
- An exemption from the real estate transaction tax regarding the disposal of real estate by a shareholder in a company on transferring and registering the property in the name of the company provided that:
- The property has been booked as part of the company's assets before the effective date of the implementing regulations.
- The seller submits audited financial statements, or a certificate from a licensed legal accountant, showing that the property was recorded as part of the company's assets before the effective date of the implementing regulations and remains an asset until the date of disposal.
- An exemption on the transfer of real estate as an in-kind participation to the capital of a real estate investment fund:
- If it is disposed of upon establishing the fund and in accordance with the rules and regulations of the Capital Market Authority.
- The exception does not include the funds that are established for the purpose of leasing real estate.
Read background about the real estate transaction tax: TaxNewsFlash (October 2020)
For more information, contact the head of KPMG’s Global Indirect Tax Services:
Lachlan Wolfers | +852 2685 7791| firstname.lastname@example.org
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.