Saudi GAZT rules out VAT exemption for Shariah-compliant home finance

The General Authority of Zakat and Tax (GAZT) denied media reports that homes financed through Murabaha or Ijara for use as a permanent home by a certain family or fourth degree relatives are exempt from the value-added tax (VAT).

The Kingdom will apply a 5 percent VAT to local real estate sector, while exempting residential property rents or licenses from the new levy, GAZT said in a statement.

Residential property will be VAT-exempt if intended for use as permanent home for the buyer.