Saudi Arabia's shift to a digital transfer and title registration framework has been accompanied by a restructured tax and fee regime that applies to all real estate transactions in the Kingdom. All statutory taxes and fees must be settled before any transfer application is submitted and must be made electronically, either via SADAD (Saudi Arabia’s national online payment system) or through official government payment portals. Cash payments and post-dated cheques are prohibited.
Understanding the applicable charges and their sequencing is essential to accurate deal pricing, funding structuring, and transaction management. The applicable taxes and fees currently include:
|
Charge |
Current Rate |
Further information |
|
Real Estate Transaction Tax (RETT) |
5% of transaction value. RETT is generally payable by the seller via SADAD. However, the parties can agree in the sale contract to allocate responsibility for this fee to the buyer. The resulting Tax Payment Certificate must be submitted as part of the transfer process and no transfer can be completed without it. |
RETT replaced the former 15% VAT that previously applied to property sales, representing a significant reduction in the tax burden on real estate transactions. Current General Authority of Zakat, Tax, and Custom (ZATCA) guidance should be checked for more complex structures, such as sale and leaseback arrangements and intra-group transfers. |
|
Value Added Tax (VAT) |
The interaction between VAT and RETT is complex and depends on the nature of the asset and transaction. Most real estate disposals are subject to RETT rather than VAT, while residential leases are generally VAT exempt and commercial leases are generally subject to VAT at the standard rate (15%). Transaction-specific tax advice should be obtained in A cases. |
Buyers should factor VAT requirements into their pricing and funding assumptions.
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Non-Saudi Disposal Fees |
Disposal fees vary depending on the type and location of the property:
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This is a new fee applicable where the disposing party is a non-Saudi, triggered on their disposal of real rights in property in the Kingdom, with the statutory maximum set at 5% of the transaction value. The rates are in draft form and have not yet been finalised; they may therefore be subject to change. The final position may also vary depending on the specific property type and location. Responsibility for payment is determined by agreement between the parties. |
|
Brokerage fee (if broker engaged) |
Up to 2.5% of transaction value (or of the first years rent for leases) unless otherwise agreed. |
The total commission may not exceed 2.5%. Responsibility for payment is determined by agreement between the parties. |
|
RER transfer registration fee |
SAR 1,600. Note that registration fees are subject to amendment and fees should be confirmed on the RER platform before submitting applications. |
Standard fee payable on transfer registration. |
|
RER first-time registration fee |
No fee. |
No charge applies for first-time registration. |
In addition to the transaction taxes and fees outlined above, owners of undeveloped urban land, and in some cases vacant properties, may also be subject to the White Land Tax regime. Unlike RETT and the other charges discussed in this article, the White Land Tax is an annual holding tax designed to encourage the development of vacant land rather than a tax triggered by a transfer of ownership. We discuss the White Land Tax in our article White Land Tax regime.
All stakeholders should ensure that tax and fee exposure is identified and factored into transaction structuring from the outset, and that payment obligations are discharged in the correct sequence to avoid delays to completion.
