Saudi Arabia: Approved Amendments to the RETT Implementing Regulations

The exemption from RETT has also been extended to include the disposal of real estate by a natural person to an ‘Investment fund’ incorporated in the KSA, where all of its units are owned directly or indirectly by the same person (this includes the case of matching the full ownership percentage of natural persons in the real estate and the entity to whom such disposal is being made).

The above exemption is available subject to no change in the ownership percentage in the entity to whom the disposal has been made for a period of not less than five years from the date of real estate disposal.

The availability of exemption has been clarified/ expanded further to include the following:

• Real estate disposal between KSA established companies where one of the entities owns directly or indirectly all the shares of the other company.

• Real estate disposal between a company and an investment fund established in KSA where the company owns all the units of the fund directly or indirectly.

• Real estate disposal among companies or investment funds established in KSA where all of their shares or units are owned by the same persons directly or indirectly.

In all cases, the shares or units, as the case may be, of the entity to whom disposal has been made shall remain owned by the same persons (directly or indirectly) for a period of not less than five years from the date of the real estate disposal.

This addition is aligned with the recent changes made to other tax regulations whereby ZATCA is aiming to:

• Spread awareness among registrants and strengthen the degree of their voluntary commitment by issuing necessary guides or tax circulars. 

• Issue explanatory decision to clarify the tax treatment of any transaction in accordance with the provisions of the Regulations

• Commit to the content of the interpretations contained in the tax guidelines, circulars, or ruling decisions while applying the provisions of the regulations to the periods following the issuance, publication, or amendment of these guidelines, tax circulars, or explanatory decisions.

This, however, will not extend to the periods prior to the issuance of publication or amendment and in the following cases:

1. The actual facts, activities or transactions differ from those specified in the guidelines, tax circulars or explanatory decisions.

2. Omission or misrepresentation of material facts.

3. Transactions that do not meet the assumptions or requirements contained in the guidelines, tax circulars or explanatory decisions.

The purpose of this addition is to clarify how the provisions of the Regulations are applied to a specific transaction that includes a specific set of facts, and it is not intended to give ZATCA the power to provide any exception, exemption, privilege, discount or any other advantage other than what is permissible under the provisions of the regulations.