Saudi Arabia: Proposed amendments to real estate transaction tax regulations
ZATCA announced amendments to the RETT regulations
May 8, 2024
The Zakat, Tax, and Customs Authority (ZATCA) on 3 May 2024 announced amendments to the real estate transaction tax (RETT) regulations, including:
- For purposes of the RETT exemption for transfers of property from an individual to a company, such property must be recognized as an asset in the books of accounts before the effective date of the regulations and such individual must be a shareholder in the company on the date of recognizing the asset in the books of accounts irrespective of the fact that he or she may be a shareholder on the date of transfer of title or not (amendment to the Article 3(a)(14)).
- The scope of the RETT exemption for in-kind subscription to any real estate investment fund established in line with the Capital Market Authority (CMA) guidelines now includes all real estate fund types of any purpose (amendment to Article 3(a)(15)).
- The restriction with respect to funds with the purpose of leasing real estate, as well as the requirement with respect to in-kind subscription only upon the initial establishment of funds, was removed.
- However, the fund units or shares corresponding to the real estate disposal must not be disposed of until the date of termination or liquidation of the fund, or for a period of five years from the date of registration or ownership of the units or shares, whichever comes first to avail the exemption. A change in percentage of shareholding in a company or units of a fund due to the public offering of shares is not considered a breach of such condition.
For more information, contact a KPMG tax professional:
Philippe Stephanny | philippestephanny@kpmg.com