The Real Estate Transaction Tax (RETT) framework in Saudi Arabia has undergone significant legal updates, with the latest implementation timeline taking effect in October 2024. This guide outlines the timeline of RETT law changes, the effective date, and the implications for corporate taxpayers engaging in real estate disposals.
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Background of RETT in Saudi Arabia
The Real Estate Transaction Tax was introduced to replace the previous title deed registration fee, aiming to enhance transparency in the property market and ensure equitable tax contributions from property transfers. RETT is charged at a standard rate of 5% on the total value of real estate disposals, applying to both individuals and corporate entities.
Timeline of RETT Law Development
- October 2020: RETT officially replaces the title deed registration fee, with immediate application to all property transfers.
- 2021–2023: ZATCA introduces clarifications, exemptions for certain property transactions, and streamlined electronic filing.
- July 2024: Legislative amendments passed to expand RETT scope, improve enforcement, and align with digital tax reporting.
- October 2024: Implementation of updated RETT provisions, including enhanced reporting obligations and compliance timelines for corporate taxpayers.
Effective Date of the Updated RETT Law
The updated RETT provisions came into force on October 1, 2024. This date marks the beginning of the enforcement of the new compliance rules, including:
- Mandatory electronic submission of RETT returns via ZATCA’s portal.
- Stricter penalties for late filing or underreporting of property transaction values.
- Integration of RETT data with property registry systems to prevent transfer without payment confirmation.
- Clearer definitions of taxable events, covering a broader range of real estate disposals.
Implications for Corporate Taxpayers
For businesses, the October 2024 changes bring tighter reporting timelines and the need for accurate valuation and documentation of all real estate transactions. Corporate taxpayers must:
- Ensure RETT is calculated and paid before property transfer.
- Maintain detailed transaction records for potential ZATCA audits.
- Coordinate with legal and finance departments to meet filing deadlines.
- Review internal policies for real estate acquisitions and disposals.
Compliance Checklist for October 2024 Implementation
- Verify transaction falls within RETT scope.
- Prepare valuation reports and supporting documents.
- Access the ZATCA portal to submit the RETT declaration.
- Pay RETT via SADAD or direct bank transfer using ZATCA’s reference code.
- Retain proof of payment to complete property registration.
Penalties for Missing the October 2024 Compliance Requirements
ZATCA imposes strict penalties for late or incorrect filings under the updated RETT framework:
- Administrative fines up to SAR 10,000 for late submission.
- Interest charges on overdue tax amounts.
- Delays in property transfer registration until RETT is fully settled.
Conclusion
The October 2024 implementation of updated RETT provisions represents a pivotal change for Saudi Arabia’s property market. Corporate taxpayers should proactively adjust compliance processes to meet new timelines, avoid penalties, and ensure smooth property transactions under ZATCA’s enhanced oversight.
