The Zakat, Tax and Customs Authority (‘ZATCA’) announced that property deals in Saudi Arabia are exempted from a 15 percent value-added tax (VAT) to support the real estate sector as of 4 October 2020.
After that ZATCA issued a Ministerial Resolution approving the rules and regulations for considering a licensed real estate developer as qualified persons. The Ministerial Resolution entered into effect from the date of issuance i.e. 30 November 2020
In order to be eligible for the refund of input tax, the developer must be engaged in exempted real estate activities. The registration process for real estate developers was illustrated in a circular issued by ZATCA on 30 June, 2021.
The VAT refund will consist of 2 phases mentioned below.
Phase 1: The registration process for real estate developers to become eligible persons
Phase 2: The process to file an application for refund of input VAT incurred in relation to exempt Real estate activities.
The taxpayers engaged in the real estate sector should carefully comply with the requirements to be able to refund VAT incurred on real estate supplies.