Residential rents exempt from Saudi VAT

Saudi Arabia will apply a 5 percent value added tax (VAT) to the local real estate sector, and only exempt the residential property rents or licenses from the new tax, the General Authority of Zakat and Tax (GAZT) said in a statement.

The sale of a residential property, however, will only be exempt from the tax as long as it is intended for use as a permanent home by the buyer.

Property-related services, including an entitlement to a property, waiver, transfer, along with other contractual rights such as the supply of hotel accommodation, non-hotel but serviced accommodation, or residential property held out for rent in a similar manner to hotel or serviced accommodation will be subject to a 5 percent VAT.

Construction, demolition, expansion and maintenance works along with the services provided by agents, auction organizers, and surveyors will be also VAT charged, the statement added.