• For the purposes of applying this regulation, the terms and phrases mentioned in this regulation have the meanings explained inArticle (First) of the Real Estate Transaction Tax Law, and the terms and phrases mentioned below have the meanings explained in front of each, unless the context requires otherwise:

  • Custodian: It has the meaning specified according to the provisions of the Capital Market Law and the regulations and instructions issued pursuant to it.

  • Representative: Any person who legally or statutorily acquires the right to represent the disposer before the authority, including but not limited to the trustee, guardian, endowment administrator, judicial receiver, liquidator, bankruptcy trustee, company representative under its articles of incorporation or basic system, and representative of any legal entity under its statute.

  • Correction Request: The request submitted to correct the real estate transaction data registered with the authority.

  • Due Tax: The amount of tax whose due date has arrived according to the law and this regulation.

  • Related Persons: Any person considered a related person or a person under common control according to Article Sixty-Four (64) of the Income Tax Law issued by Royal Decree No. (M/1) dated 15/1/1425H, and the transaction pricing instructions issued by Decision (6-1-19) dated 25/5/1440H, and their amendments or any that replace them later in the Kingdom.

  • Securities: It has the meaning specified according to the Capital Market Law, which has the characteristics of ownership or contribution rights, including but not limited to shares and fund units.

  • Shares: It refers to ownership or contribution rights in properties or in a legal entity or any type of partnership.

  • Merger: It refers to the consolidation of one or more existing legal entities into another existing legal entity, or the blending of two or more existing legal entities to establish a new legal entity according to any provisions regulating merger operations in the Kingdom.

  • Acquisition: It refers to the process carried out by exchanging shares - including securities - resulting in the acquisition of all shares of a real estate company, provided that both the disposer and the acquirer are legal entities.

  • Linked Transactions: It refers to multiple transfer operations of a share in a real estate company by a person or persons, in cases where the transactions are part of a single agreement or series of transactions, or in cases where the disposing persons act in agreement on the shares.

  • Agreement Disposition: It refers to cooperation under an agreement - whether binding or non-binding, or under an understanding - whether formal or informal - between persons, with the aim of disposing of shares in a real estate company, and for the purposes of applying the provisions of the law and this regulation, related persons are considered to be acting in agreement among themselves unless proven otherwise.

  • Relatives up to the Third Degree:

  • Relatives up to the third degree mean the following:

    • A- First degree: father, mother, son, daughter.

    • B- Second degree: brother, sister, grandfather, grandmother, grandson, granddaughter, grandson of daughter, granddaughter of daughter.

    • C- Third degree: uncle, maternal uncle, aunt, maternal aunt, nephew, niece, nephew of sister, niece of sister.

• A- A tax of (5%) five percent is imposed on real estate transactions, regardless of the condition of the real estate being transacted, its form, or its use at the time of the transaction, whether the transaction includes the entire real estate or a part of it, whether it is segregated or jointly owned, and whether the real estate being transacted is completed, under construction, on the map, or otherwise, whether notarized or not.

• B- For the purposes of imposing tax on real estate transactions, any movable property that its owner places in a real estate as a service or exploitation of the real estate on a permanent basis, even if it is not permanently connected to it, is considered real estate.

• C- The total value of the real estate transaction is the value of any consideration, whether monetary or in-kind, agreed upon concerning the real estate transaction, provided it is within the limits of the fair market value, taking into account any specific cases stipulated in this article.

• D- Part of the total value of the real estate includes permits, original and corollary real rights, and other similar rights that are closely linked to the real estate so that they cannot be considered as separate rights from it.

• E- In taxable real estate transactions resulting in the transfer of shares in real estate companies, the tax is calculated on the fair market value, at the date of the transaction, of all real estate directly or indirectly owned by that company for any purpose (multiplied by) the percentage of the transferred share, or on the value agreed upon between the transferor and the transferee allocated to the real estate if it is higher.

• F- In taxable real estate transactions resulting in granting the right to benefit from the real estate for a period exceeding fifty (50) years, the tax is calculated on the present value of the fair market value of the right to benefit at the date of the transaction, or the present value of the total consideration agreed to be paid, whichever is higher. If the agreed consideration for the right to benefit is modified after the date of the transaction, the tax must be recalculated and a correction request submitted if the recalculation results in an increase or decrease in the due tax, according to the procedures specified in Article (Eleven) of this regulation.

• G- In taxable real estate transactions related to projects (build, own, operate, and transfer), the tax is calculated on the total value of the transaction represented in the fair market value of the real estate transaction at the actual date of transfer of ownership to the transferee, as specified in Article (Four) of this regulation.

• H- For the purposes of applying Article (One) of the law, the definition of a real estate company applies to any company, fund, or entity that directly or indirectly owns real estate within the Kingdom with the aim of generating revenue from selling or leasing it, provided that the total fair market value of those real estates is not less than (50%) of the total fair market value of its assets, at the date of transfer of the share in that company or at any time during the three hundred and sixty-five (365) days preceding the date of transfer of the share.

• I- A real estate transaction is created if a person or a group of persons - acting in agreement among themselves - transacts a total share of thirty (30%) percent or more of the shares of a real estate company through one or more related transactions during any period of three (3) years starting from or after the date the percentage held by that person or persons reaches thirty (30%) percent or more of the shares of that real estate company. Transactions that do not meet the provisions of this paragraph are not considered real estate transactions.

• J- Acquiring new shares in a real estate company through an increase in the capital of that company is not considered a real estate transaction, in the following cases:

  • 1- Current partners acquiring the shares resulting from the increase in the capital of the real estate company, provided that their ownership percentages in that company do not change from their ownership percentages before the increase.

  • 2- New partners acquiring the shares resulting from the increase in the capital of the real estate company, provided that the current partners in the real estate company retain the shares owned by them before the increase without disposing of those shares for five (5) years from the date of the capital increase.

• K- The segregation of real estate according to the segregation procedures carried out by the competent authorities is not considered a real estate transaction. Likewise, the division of jointly owned real estate under an ownership deed issued by a public notary or an accredited notary among its owners is not considered a real estate transaction, provided the following are met:

  • 1- The ownership of the real estate for all owners is proven in a single deed for the same real estate.

  • 2- The ownership of the real estate after the division reflects the ownership rights of each owner as proven in the real estate ownership deed.

  • 3- There is no consideration from one owner to another concerning the division.

• L- The real estate transaction is subject to tax only once, provided the unity of the transaction parties, the unity of the real estate, and the unity of the value are achieved. This includes real estate transactions resulting from Murabaha and Ijara contracts for the purpose of ownership and financial leasing, provided the following conditions are met:

  • 1- The first real estate transaction resulting from those contracts is subject to tax from the transferor to the licensed financing entity according to the applicable regulations in the Kingdom.

  • 2- The transaction events are included in the contracts issued by the financing entities, specifying the parties to the first and subsequent transactions, the real estate, and the value subject to the real estate transaction.

  • 3- There is no change in the description or value of the real estate listed in the previous financing contracts.

• The following provisions apply regarding the determination of the date of real estate action in cases where notarization has not occurred:

  • A- In cases of taxable real estate actions that result in the transfer of possession of the real estate for the purpose of ownership, the date of the real estate action is the date the real estate is placed in the possession of the transferee.

  • B- In cases of taxable real estate actions that result in granting the right to benefit from the real estate for a period exceeding fifty (50) years, the date of the real estate action is the date of granting the right to benefit, unless the granting of the right to benefit is canceled within (30) days from the date of granting.

  • C- In cases of taxable real estate actions resulting from projects (build, own, operate, and transfer), the date of the real estate action is the actual date of transfer of ownership to the transferee, which means the date on which all conditions related to the transfer of ownership are fulfilled, according to the requirements of the contract or agreement concluded between the parties to the action.

  • D- In cases of taxable real estate actions resulting from the transfer of shares in a real estate company, the date of the real estate action is the date on which the shares are transferred, or the date on which an unconditional agreement to transfer those shares is concluded, whichever is earlier.

  • E- In cases of taxable real estate actions resulting from the sale of real estate off-plan according to the laws, regulations, and instructions in force in the Kingdom, the date of the real estate action is the date of notarizing the transfer of ownership of the real estate with the public notary or the accredited notary.

  • F- In cases where the real estate action is exempt from tax on the condition of meeting specific conditions to enjoy the exemption according to the provisions of Article (three) of the law and Article (three) of this regulation, but later became non-exempt from tax due to the failure to continue meeting one or more of the conditions necessary for the exemption, the tax is due from the date of that real estate action that did not meet its exemption conditions.

  • G- Without prejudice to the provisions contained in this article, the date of the real estate action is the date on which an unconditional agreement regarding the real estate action was concluded or the date on which the ownership was actually transferred, whichever is earlier.

• A- According to paragraph (2) of Article (Fifth) of the Law, the tax may be paid after the date of the real estate action in the following cases:

  • 1- In cases of taxable real estate actions resulting from the transfer of shares in a real estate company, the tax must be paid for the action, no later than thirty (30) days from the date the shares are transferred, or the date an unconditional agreement to transfer those shares is concluded, whichever is earlier.

  • 2- In cases where the real estate action is exempt from tax on the condition of meeting specific conditions to enjoy the exemption according to the provisions of Article (Third) of the Law and Article (Third) of this Regulation, but later becomes non-exempt from tax due to failure to continue meeting one or more of the conditions necessary for the exemption, the tax must be paid for it no later than thirty (30) days from the date of breach of the conditions for applying the exemption.

• B- Without prejudice to the provisions contained in paragraph (A) of this Article, in cases where the real estate action is not notarized according to the laws and regulations in force in the Kingdom, the tax must be paid no later than thirty (30) days from the date of the real estate action pursuant to Article (Fourth) of this Regulation.

• C- In cases of real estate actions resulting from the sale of off-plan properties according to the laws, regulations, and instructions in force in the Kingdom, the tax must be paid on the date of notarization with the Public Notary or the accredited notary or before.

• D- The Authority may demand the payment of the due tax within (30) days from the date of the action in cases where it is proven to the Authority that the main purpose of the delay in paying the tax was by the action taker.

For the purposes of Article (Six) of the Law, fictitious actions are created in cases where the parties in one or more real estate actions create documents that give a different form to the real estate action, leading to the concealment of the true action, or execute any other legal arrangements that do not reflect the actual rights and obligations arising from the true action or actions, and the tax is calculated based on the true action.

• A- According to paragraph (1) of Article (Seventh) of the Law, the disposer is responsible for paying the tax due to the Authority according to the following procedures:

  • 1- Payment is made to the bank account specified by the Authority, with reference to the transaction number specified by the Authority.

  • 2- The tax due to the Authority as a result of the tax assessment is payable according to the specified dates for paying the tax on taxable real estate transactions under the provisions of Article (Fifth) of the Law and Article (Fifth) of this Regulation, and penalties begin to be calculated according to the provisions of the Law and this Regulation.

• B- The disposer to him is jointly responsible with the disposer for paying the tax due in cases where it is proven to the Authority that the disposer to him was the reason for not paying the tax due, including, for example, the following:

  • 1- The disposer and the disposer to him arranging to reduce the amount of tax due or not paying it on time.

  • 2- The disposer to him committing any act that led to a violation of the restrictions specified in this Regulation, resulting in not paying the tax due or reducing it or not paying it on time.

• C- In cases where it is considered that the disposer to him is jointly responsible for the tax due, the Authority must notify both the disposer and the disposer to him - jointly responsible - of the amount of tax due and its payment date. The disposer to him must notify the Authority when he pays the tax if he is jointly responsible.

• A- The authority may verify the value of the real estate action, particularly in any of the following cases:

  • 1- Actions between related persons.

  • 2- Actions whereby the consideration is divided between the real estate and other assets.

  • 3- Cases involving non-cash consideration.

  • 4- Other cases involving unknown or unspecified value.

  • 5- Undocumented or undisclosed real estate actions to the authority.

  • 6- Cases suspected of artificial manipulation of the real estate action value for any purpose, or any other case of tax evasion.

• B- In cases where the authority verifies the value of the real estate action, the disposer or the disposed-to party is granted the opportunity to provide an evaluation of the real estate action value, provided it is issued by an accredited appraiser.

• C- If the authority deems the value of the real estate action to be less than the fair market value limits, or in cases of unspecified or undisclosed actions, it may assess the value of the real estate action according to the fair market value limits, taking into account the approved real estate indicators, or seek the assistance of an accredited appraiser to estimate the fair market value.

• D- The authority must demand the payment of the due tax that should have been calculated within a period not exceeding (three) years from the date of the disclosed real estate action, or within a period not exceeding (three) years from the date it became aware of the undocumented or undisclosed real estate action.

• E- The periods mentioned in the law and this regulation do not affect the authority's right to demand the payment of the due tax in cases where the time constraints specified in this regulation for tax-exempt real estate actions are violated according to Article (three) of the law.

• F- The authority must notify the person who has not paid the tax or any fines due for payment, and take the necessary measures to collect them.

• G- The amount of tax or fines is considered final if the period specified by law for objecting to the authority's decision expires without any objection or grievance being submitted according to the provisions of Article (seventeen) of the law, or if a final decision is issued as specified in the rules of the Zakat, Tax, and Customs Committees and any subsequent rules applicable to those committees, or if a settlement agreement is reached with the authority regarding those amounts.

• H- In the event of non-payment of the final tax dues, which include the final tax amount and fines, the authority shall apply the provisions stipulated in Articles (seventy-three, seventy-four, and seventy-five) of the Income Tax Law issued by Royal Decree No. (M/1) dated 15/1/1425 AH, to collect those tax dues.

• According to Article (Nine) of the Law, the following procedures, regulations, and timeframes apply regarding the refund of tax paid in excess or by mistake, or tax paid on an incomplete real estate action or on a real estate action that has been canceled:

  • A- The disposer or his representative may claim a refund of the tax amount paid in accordance with the provisions and conditions stipulated in this article, in any of the following cases:

    • 1- In the event that the tax due is paid in excess or by mistake, including cases where the tax was paid and it was later proven that the real estate action was exempt from tax.

    • 2- In the case of an incomplete real estate action for which the tax was paid to the Authority, provided that the disposer returns any consideration received in relation to the incomplete real estate action. The Authority must be notified in accordance with the procedures and timeframe specified in Article (Eleven) of this Regulation.

    • 3- In the event of the cancellation of the real estate action in accordance with the provisions of subparagraph (21) of paragraph (A) of Article (Three) of the Law, provided that all the following conditions are met:

      • A- The previous owner returns the full value of the property subject to cancellation to the disposer.

      • B- The disposer transfers the property to the previous owner, by documenting it with the Public Notary or the accredited notary, within ninety (90) days from the date of documenting the real estate action subject to cancellation, without any change to the description of the property.

      • C- Notify the Authority of the cancellation in accordance with the procedures and timeframe specified in Article (Eleven) of this Regulation.

  • B- A request for a tax refund must be submitted to the Authority as determined by the Authority. The refund request must also be submitted within a period not exceeding twelve months (12) from the date of the payment due resulting from the real estate action in accordance with the provisions of Article (Five) of the Law and Article (Five) of this Regulation which resulted in the tax refund event, or within sixty (60) days from the date of issuance of a final decision by the competent judicial authority or from the date of issuance of a settlement decision with the Authority regarding the real estate action.

  • C- The Authority shall review the tax refund request and may request any additional documents to verify the validity of the request, and shall issue its decision to approve or reject partially or wholly with notifying the applicant and stating the reasons for rejection. In all cases, the Authority must issue a decision regarding the refund request within (30) days from the date of submitting the request, otherwise, the request is considered rejected. In the event of approval of the refund wholly or partially, the Authority must complete the refund procedures and return the amount to the bank account specified in the refund request, within (30) days from the date of approval of the refund request.

  • D- The Authority may, for one time, extend the period for issuing its decision regarding the refund request referred to in paragraph (C) of this article to another similar period, provided that the extension decision is issued before the end of the first period, and the applicant is informed of this.

  • E- Requests for refund of amounts paid in excess that are subject to objection or appeal by the disposer will not be considered until a final decision is issued regarding that objection or appeal or a final decision by the competent judicial authority.

  • F- The Authority may deduct or withhold the refund amount in the event of other taxes, zakat, fines, or any other amounts due on the disposer and unpaid to the Authority, provided that the Authority informs the applicant about how to settle his creditor balance.

• According to Article Eleven of the Law, it is permissible to disclose any information received or accessed by the Authority's employees and all those working for or on its behalf in accordance with the following regulations and conditions:

  • A- The Authority's employees or affiliates may disclose personal information obtained in their official capacity in the following cases:

    • 1- If the disclosure of personal information is required by a court order.

    • 2- If the disclosure is necessary for the exercise of the duties and powers assigned to the Authority.

    • 3- If the disclosure is to the Authority's employees or affiliates, the General Court of Audit, a judicial authority, a court, or a tax authority of a foreign country in accordance with any treaty or agreement to which the Kingdom is a party.

  • B- The Authority's employees or affiliates may disclose personal information in the course of work and in accordance with the instructions issued by the Authority and in cases where they are authorized to do so.

  • C- Without prejudice to the provisions contained in other paragraphs of this article, information may be disclosed without breaching confidentiality if the information is provided to another person based on written consent from the person to whom the information relates.

  • D- The Authority's employees and affiliates and all those working for or on its behalf are committed to maintaining the confidentiality of information in accordance with the provisions of the Law and this Regulation.

  • E- Anyone who violates the provisions stipulated in this article is subject to the procedures and penalties specified by a decision of the Council.