The Council of Ministers,
after perusal of Royal Court File 1758 dated 8 Muharram 1446 [15 July 2024], regarding the draft Law of Real Estate Transaction,
after perusal of the aforementioned draft law,
after perusal of Royal Order O/84 dated 14 Safar 1442 [2 October 2020],
after perusal of the Income Tax Law issued by Royal Decree D/1 dated 15 Muharram 1425 [26 February 2004],
after perusal of the Value Added Tax Law issued by Royal Decree D/113 dated 2 Dhu Al-Qa’dah 1438 [26 July 2017],
after perusal of the Bureau of Experts at the Council of Ministers Minutes 502 dated 21 Dhu Al-Hijja 1443 [21 July 2022], and Memorandums 194 dated 13 Muharram 1444 [11 August 2022], 355 dated 8 Safar 1444 [5 September 2022], 2262 dated 24 Rajab 1444 [15 February 2023], 1427 dated 25 Rabi Al-Thani 1445 [9 November 2023], 2682 dated 27 Rajab 1445 [7 February 2024], 4186 dated 5 Dhu Al-Hijja 1445 [12 June 2024], and 504 dated 9 Safar 1446 [15 August 2024],
after perusal of Council of Economic and Development Affairs Recommendation 18-10/45/R dated 19 Sha’ban 1445 [29 February 2024],
after perusal of Shura Council decision 460/43 dated 3 Muharram 1446 [10 July 2024],
and after perusal of the General Committee of the Council of Ministers Recommendation 2123 dated 30 Safar 1446 [5 September 2024],
hereby decides
First
The Law of Real Estate Transaction Tax is hereby approved in the form attached.
Second
The competent judicial authority stipulated in article 17 of the law—referred to in clause First of this decision—is the primary and appeal committees that are stipulated in the Income Tax Law, issued by Royal Decree D/1 dated 15 Muharram 1425 [7 March 2004].
Third
The Zakat, Tax and Customs Authority shall apply the provisions stipulated in articles 73, 74, and 75 of the Income Tax Law—issued by Royal Decree D/1 dated 15 Muharram 1425 [7 March 2004]—to the tax dues of the authority in accordance with the provisions of the Law referred to in clause First of this decision.
Fourth
1. The concerned parties who have made any undocumented real estate transaction before the effective date of the real estate transaction tax on 14 Safar 1442 [2 October 2020], are granted a period of one Hijri year from the effective date of the system—referred to in clause First of this decision—to rectify their status and document the real estate transactions they have made in accordance with the relevant regulatory provisions, provided that the date of the real estate transaction is proven before the competent authority. The Minister of Justice and the Chairman of the Board of Directors of the Zakat, Tax and Customs Authority shall agree on the controls for implementing this paragraph, and they shall submit all that requires taking action in this regard.
The period referred to in this paragraph may be extended by a decision by the Council of Ministers based on a proposal from the Chairman of the Board of Directors of the Zakat, Tax and Customs Authority.
2. Any partner in a company who has made a real estate transaction—represented by transferring the property in the name of the company without documenting it—is granted a period of one Hijri year from the effective date of the system referred to in clause First of this decision, to document the transaction and provide the Zakat, Tax and Customs Authority with proof of it. This period may be extended by a decision by the Council of Ministers based on a proposal from the Chairman of the Board of Directors of the Zakat, Tax and Customs Authority. In this case, the real estate transaction is exempt from the real estate transaction tax, provided that the real estate subject to the transaction is registered within the assets of the company before the real estate transaction tax comes into effect, and that the person conducting the transaction submits audited financial statements or an accredited certificate—from a licensed chartered accountant—proving that the real estate is included in the assets of the company before the real estate transaction tax comes into effect and up to the date of the transaction.
Fifth
Without prejudice to the provisions of the law—referred to in clause First of this decision—the following are exempt from real estate transaction tax:
1. Real estate transactions carried out in implementation of lease-to-own contracts and financial leasing contracts, concluded before the effective date of real estate transaction tax on 14 Safar 1442 [2 October 2020].
2. Real estate transactions that were subject to value-added tax before being documented, if the documentation was done after the provisions of the Law of Real Estate Transaction came into effect.
Sixth
Confirming that real estate supplies subject to real estate transaction tax are exempt from value added tax.
A draft royal decree has been prepared in the form attached.
Seventh
The Zakat, Tax and Customs Authority shall, after the lapse of three years from the entry into force of the law—referred to in clause First of this decision—review the mechanism for calculating the real estate transaction tax, and that this must include examining the extent to which it is appropriate to calculate it on the basis of brackets or categories according to the use of the property (residential, commercial, agricultural, etc.) and its location, and submit its findings in this regard.
The Prime Minister
Issued on: 14 Rabi Al-Awwal 1446
Corresponding to: 18 September 2024
Published in Umm Al-Qura 5051 issued on 11 October 2024.