Article 6 of the Saudi Real Estate Transaction Tax Law

This article addresses attempts at evading the tax by showing a disposition that differs from the reality of what the parties agreed. It contains two provisions:

1. The prohibition: no person connected with the real estate disposition may take any step or conclude any agreement that results in creating sham dispositions (that is, apparent ones that do not reflect the truth) or concealed ones (that is, that hide the actual disposition), where this results in the due tax not being paid correctly. The prohibition is not limited to the two parties to the disposition; it covers any person connected with the event.
2. The reality counts: for the purposes of applying the Law, the tax is calculated and collected on the basis of the real disposition, not the sham or concealed one. If the parties show a disposition or value different from the truth, the tax is based on what actually took place.

This article complements Article 5, which requires the tax to be paid to the Authority on the date of the disposition, and Article 7, which makes the disposer responsible for the due tax and makes the transferee jointly responsible with him in cases where it is proven to the Authority that he was a cause of the tax not being paid. Anyone who took part in arranging a sham disposition cannot be sure responsibility for payment will not fall on them.

If a person has a complex arrangement for transferring real estate and fears it may be considered sham, it is best to consult a lawyer who specializes in real estate and tax cases before concluding it.