Article 2 of the Saudi Real Estate Transaction Tax Law

This article is the basis for imposing the tax, and contains three provisions:

1. The rate and its scope: the tax is imposed at 5% on a real estate disposition, whatever the state, form or use of the property at the time of the disposition, whether the disposition covers the whole property or part of it, specified or undivided, and whether the property is completed, under construction, off-plan or otherwise, and whether or not the disposition is documented. Lack of documentation therefore does not take the disposition outside the tax.
2. The basis of calculation: the tax is calculated on the total value of the disposition agreed between the disposer and the transferee, where that value on the date of the disposition is within fair market value. If the purchase is financed by a legally licensed body, the cost of deferral (that is, the financing cost) is not included in the value of the disposition when calculating the tax.
3. Only once: the disposition is subject to the tax only once where unity of the parties to the disposition, unity of the property and unity of value are met.

The article refers to the Regulations to set the provisions and rules necessary to apply it, including those relating to the real estate company, so the procedural details are found in the Regulations.

To understand the article, refer to the definition of real estate disposition and fair market value in Article 1, to the full exemptions in Article 3, which exclude certain dispositions from this tax, and to Article 4, which makes the tax due on the date of the disposition, which is the date of its documentation. Anyone with a complex disposition should consult a lawyer who specializes in real estate and tax cases.