Saudi Arabia Introduces 5% Tax on Real Estate

Saudi Arabia has implemented a 5% Real Estate Transaction Tax (RETT), effective April 10, as part of its ongoing efforts to diversify the economy. The Zakat, Tax, and Customs Authority (ZATCA) announced that the tax will apply to all real estate transactions across the Kingdom, including residential, commercial, and industrial properties.

The tax will be imposed regardless of the property’s development status, usage, or whether the transfer involves full or partial ownership. It will also cover undocumented transactions. To comply with the new regulation, all property transfers must be registered through the RETT platform on ZATCA’s official website.

Parties involved in a transaction are required to declare property details and any applicable exemptions before finalizing the transfer at a notary or legal authority.

The introduction of the RETT aligns with Saudi Arabia’s broader strategy to stimulate growth in the real estate market, which is expected to expand significantly in the coming years. According to a report by real estate services firm JLL, Saudi Arabia is leading economic growth in the Gulf region. The Kingdom’s non-oil sector is projected to grow by 5.8% in 2025, up from 4.5% in 2024. The construction sector also performed strongly in 2024, with project awards totaling $29.5 billion. By 2029, the Saudi real estate market is expected to reach $101.62 billion, growing at an annual rate of 8% from 2024.

ZATCA stated on its official X account that the RETT aims to create a clear legal framework, attract investment, and enhance tax exemptions for economic, social, and regulatory goals. The regulations also address challenges in the real estate sector, including fair market value verification.

Notably, the fine for delayed tax payments has been reduced from 5% to 2%. Exemptions include property transfers due to inheritance divisions, registered public and private endowments, and transfers between spouses or relatives up to the third degree.