Tax Guide for Investors in Saudi Arabia

Understanding RETT, VAT, and White Land Tax.

Real Estate Taxes in Saudi Arabia

Investing in Saudi real estate involves understanding a few key tax obligations. Here is a breakdown of the most important ones.

1. Real Estate Transaction Tax (RETT)

The Real Estate Transaction Tax (RETT) is a 5% tax imposed on the disposal of real estate.

• Rate: 5% of the property value.
• Payer: typically the seller, but often negotiated.
• Exemptions: First-time home buyers (citizens) up to 1M SAR (conditions apply).

2. Value Added Tax (VAT)

Real estate transactions are generally exempt from VAT (replaced by RETT). However, VAT applies to:

• Commercial Leases: 15% VAT on rental income from commercial properties.
• ** services:** Brokerage fees, property management fees, etc., are subject to 15% VAT.

3. White Land Tax (WLT)

The White Land Tax fees apply to undeveloped urban land to encourage development.

• Rate: 2.5% of the land value per year.
• Applicability: Large undeveloped plots in major cities (Riyadh, Jeddah, Dammam).
• Purpose: To combat land hoarding and increase housing supply.

Summary Table

| Tax Type | Rate | Applies To | | :--- | :--- | :--- | | RETT | 5% | Sale of property | | VAT | 15% | Commercial Rents, Services | | WLT | 2.5% | Undeveloped Urban Land |