Understanding Saudi Arabia’s New 5% Real Estate Transaction Tax (RETT)
Saudi Arabia has recently introduced a new tax—the Real Estate Transaction Tax (RETT)—effective from April 10, 2025. This 5% tax is replacing the previous 15% VAT on property transactions, aiming to simplify processes, enhance market transparency, and align with Vision 2030 goals. If you’re considering investing or buying property in Saudi Arabia, it’s crucial to understand how RETT works.
Properties and Transactions Affected by RETT
The RETT applies broadly, covering:
- Residential properties: Apartments, villas, houses.
- Commercial properties: Offices, retail spaces, warehouses.
- Land transactions: Developed and undeveloped plots.
- Previously undocumented property transfers.
For instance, if you’re buying a luxury apartment in Riyadh’s Al Olaya district for SAR 2 million, you’ll pay SAR 100,000 in RETT.
How the 5% RETT is Calculated – Practical Examples
The calculation is straightforward:
RETT = Property Price x 5%
- Riyadh Apartment: SAR 1,500,000 × 5% = SAR 75,000 RETT.
- Jeddah Office Space: SAR 8,000,000 × 5% = SAR 400,000 RETT.
- Dammam Land: SAR 5,000,000 × 5% = SAR 250,000 RETT.
Typically, buyers handle this tax unless otherwise agreed upon in the sale.
Step-by-Step Guide to Declaring RETT via ZATCA Platform
Declaring RETT is simple using the Zakat, Tax and Customs Authority (ZATCA) website:
- Register an account at zatca.gov.sa.
- Log in and navigate to the RETT section.
- Enter buyer and seller information, property details, and price.
- Upload required documents: sale agreement, title deed, IDs.
- Confirm the details and make the payment.
- Obtain your official RETT certificate—essential for property registration.
Be sure to declare your transaction within 30 days to avoid penalties.
RETT Exemptions: Who Qualifies and How to Apply
Certain transactions qualify for exemptions, including:
- First-time homebuyers (under specific conditions).
- Properties under government housing programs.
- Family transfers like inheritance or gifting.
To apply for an exemption:
- Submit an exemption request via ZATCA.
- Include supporting documentation.
- Await approval (usually within two weeks).
Impact of RETT on Saudi Arabia’s Real Estate Market and Investors
Short-term market adjustments are expected, but long-term effects include increased transparency and investor confidence. RETT encourages legal and documented transactions, aligning closely with Vision 2030’s economic goals.
Tips for Ensuring Compliance and Avoiding Penalties
Stay compliant by:
- Reporting transactions promptly.
- Maintaining accurate records.
- Consulting real estate professionals.
- Regularly checking updates from ZATCA.
- Avoiding undocumented deals to steer clear of fines.
Get Professional Help: Book a Free Consultation with Real Estate Saudi
Navigating RETT doesn’t have to be complicated. Real Estate Saudi is ready to help you every step of the way:
- Expert guidance on RETT compliance.
- Assistance with documentation and ZATCA submissions.
- Strategic investment advice for optimal returns.
Need expert guidance navigating Saudi Arabia’s new Real Estate Transaction Tax? Schedule your complimentary consultation with Real Estate Saudi today and invest confidently.
Certain FAQs
What is the Real Estate Transaction Tax (RETT) in Saudi Arabia and when did it become effective?
The Real Estate Transaction Tax (RETT) is a 5% tax applied to the total value of real estate transactions within Saudi Arabia. This tax became effective on April 10, 2025, replacing the previous 15% VAT that was applied to property sales. RETT is designed to simplify property transactions, increase transparency, and attract both local and foreign investments, aligning with Saudi Arabia’s economic diversification goals under Vision 2030.
How do I calculate the new 5% RETT on property purchases in Saudi Arabia?
Calculating the RETT is straightforward. The tax amount equals 5% of the total transaction value:
Formula:
RETT amount=Property Price×5%\text{RETT amount} = \text{Property Price} \times 5\%
Practical Example:
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If you purchase an apartment in Riyadh worth SAR 2,000,000, the RETT due is:
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SAR 2,000,000 × 5% = SAR 100,000.
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Typically, the buyer is responsible for paying the RETT unless explicitly stated otherwise in the sale agreement.
Who is exempt from paying RETT in Saudi Arabia, and how can exemptions be claimed?
Certain individuals and transactions qualify for exemptions from RETT, notably:
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First-time homebuyers (under specific eligibility criteria defined by ZATCA).
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Properties purchased under government-sponsored affordable housing schemes.
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Transfers between immediate family members, such as inheritance or gifting.
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Properties registered under religious, charitable, or public-benefit organizations.
How to claim an exemption:
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Visit the ZATCA RETT online platform (zatca.gov.sa).
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Submit an exemption application form online.
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Upload necessary supporting documents (proof of eligibility, ID, etc.).
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Await official approval, typically processed within 10–15 working days.
What are the penalties for non-compliance with Saudi Arabia’s Real Estate Transaction Tax (RETT)?
Failing to comply with RETT regulations, including late reporting or incorrect declarations, can result in significant penalties, such as:
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Monetary fines ranging between 5% and 25% of the total RETT due, depending on the delay period and severity of non-compliance.
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Potential legal actions for intentional tax evasion or fraud.
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Delays in property registration and transfer procedures, affecting property ownership rights.
To avoid penalties, always declare your real estate transactions clearly and promptly through the ZATCA platform.
How do I declare and pay RETT through the ZATCA online platform?
Declaring and paying RETT online is simple and secure:
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Step 1: Register or log into your account on the ZATCA online platform (zatca.gov.sa).
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Step 2: Navigate to the “Real Estate Transaction Tax” (RETT) section.
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Step 3: Enter required details, including buyer and seller information, property type, location, and transaction amount.
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Step 4: Upload all necessary documentation (contract, title deed, IDs, etc.).
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Step 5: Review the information and confirm your submission.
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Step 6: Make your RETT payment via approved payment channels such as SADAD, bank transfer, or online payment gateway.
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Step 7: Download your official RETT payment certificate, essential for completing property registration.
Completing this process within 30 days of your transaction will ensure compliance and avoid potential fines.
