Royal Order Issued

The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud issued a royal order as follows:

First: Exempting real estate supplies made after the provisions in this order come into effect from value added tax (VAT).
Second: Refund of the inputs' VAT paid after the implementation of the provisions contained in this order to licensed real estate developers, in accordance with the refund controls and related rules approved by the Minister of Finance, Chairman of the Board of Directors of the General Authority for Zakat and Tax, in coordination with the Minister of Housing. The Minister of Finance, Chairman of the Board of Directors of the General Authority for Zakat and Tax, approves a list - updated periodically - of the names of those developers.

Third: Imposing a tax in the name of (Real Estate Transaction Tax) on real estate supplies that take place after the enforcement of the provisions contained in this order, at a rate of (5%) of the value of the real estate supply, to be collected upon documenting real estate disposition.

Fourth: For the purposes of implementing what is stated in clauses (First) and (Third) of this order, the Minister of Finance, Chairman of the Board of Directors of the General Authority for Zakat and Tax, determines real estate supplies that are exempt from VAT and are subject to real the Real Estate Transaction Tax.

Fifth: The state bears the Real Estate Transaction Tax for no more than an amount of 1.000,000 riyals of the price of buying the first home by a citizen. The Minister of Finance, Chairman of the Board of Directors of the General Authority of Zakat and Tax shall approve the necessary controls and procedures.

Sixth: The General Authority for Zakat and Tax shall be responsible for managing and collecting the real estate disposal tax, and the Minister of Finance, Chairman of the Board of Directors of the General Authority for Zakat and Tax shall issue the necessary decisions, including determining the provisions that apply to this tax in terms of the VAT regulation, to the extent consistent with the nature of this tax.

Seventh: The Tax Committee for Resolution of Tax Violations and Disputes and the Appeal Committee for Tax Violations and Disputes- whose formation and competencies are stipulated in Royal Decree No. (M / 113) on 2/11/1438 H) - shall settle the violations and disputes arising from the application of the provisions referred to in clause (Sixth) of this order.

Eighth: What has been stated in clauses (Sixth) and (Seventh) of this order shall be applied until the Real Estate Transaction Tax regulation is issued and it is acted upon.

Ninth: The previous items shall be published in the official gazette, and the Minister of Finance, Chairman of the Board of Directors of the General Authority for Zakat and Tax shall determine the date of its implementation, provided that it is following its publication, and not exceeding fifteen days from the date of its issuance.

Tenth: The General Authority for Zakat and Tax prepares a draft regulation for the tax of real estate disposal in light of what the previous clauses have included, and it shall be submitted within a period not exceeding ninety days from the date of this order to complete the necessary legal procedures in this regard.

Eleventh: Competent authorities shall be informed of this order.