Zakat authority clarifies real estate exempt from transaction tax

The Zakat, Tax and Customs Authority has outlined the mechanisms for exempting real estate from the real estate transaction tax.

Real estate transaction tax

A beneficiary asked the authority whether properties valued at or below 375,000 riyals are exempt from the tax.

The authority explained that, according to procedures issued under Board of Directors Resolution No. (26-04-10) dated August 16, 2020, value-added tax (VAT) is not due on real estate supplied by an individual between January 1, 2018, and the effective date of the real estate transaction tax on October 4, 2020, provided the individual (a natural person) was not regularly engaged in real estate sales for income.

It added that an individual is considered to be engaged in real estate sales if they make more than one real estate supply within any consecutive 12-month period. Tax becomes due if the total value of these supplies exceeds the mandatory registration threshold under the Unified VAT Agreement for Gulf Cooperation Council States—1 million riyals in 2018, or 375,000 riyals in 2019 and thereafter.

The authority stated that if an individual has paid VAT that was not due for such a transaction, and has not previously deducted input tax related to the property in question, they may file a refund claim with the Zakat, Tax and Customs Violations and Disputes Committees.

Procedures and requirements for filing a claim can be obtained by contacting the General Secretariat of the Zakat, Tax and Customs Committees via @CareGstc or by calling 8001220000.

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