Saudi Arabia has launched a 5 percent Real Estate Transaction Tax (RETT) starting April 10, aimed at supporting economic diversification. This new tax is applicable to all property transactions, including residential, commercial, and industrial, regardless of their development status or ownership type. It also covers undocumented transactions.
Property transfers must be registered via the RETT platform on the Zakat, Tax and Customs Authority’s (ZATCA) website. Participants must declare property details and any exemptions before finalizing the transfer with a notary.
This initiative is part of Saudi Arabia’s strategy to boost the real estate market, anticipating significant growth by 2025. A report by JLL notes strong economic progress in the Gulf, with Saudi Arabia at the forefront. The non-oil sector is predicted to expand by 5.8 percent in 2025, increasing from 4.5 percent in 2024. The construction sector showed robust performance in 2024 with $29.5 billion in project awards. The real estate market is expected to reach $101.62 billion by 2029, growing annually by 8 percent from 2024.
ZATCA emphasizes that the RETT regulation aims to provide a clear legal framework to stimulate the real estate sector, attract investment, and enhance tax exemptions for various goals. It also seeks to tackle industry-specific challenges.
The regulations clarify taxable property transactions, establish tax calculation and payment procedures, and include measures for verifying fair market value. The penalty for late tax payments has been reduced from 5 percent to 2 percent. Exemptions are granted for property transfers due to inheritance, registered endowments, and transfers between spouses or close relatives.