Saudi Arabia Mulls Up To SR50,000 Fine For Real Estate Tax Violations

 

Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) has proposed fines of up to SR50,000 for violations involving real estate transaction tax, including providing inaccurate information about property transactions.

 

The authority has invited public comments on a draft regulation titled “Classification of Violations and Penalties for Real Estate Transaction Tax”. The consultation on Article 15, Paragraph 3, is being conducted through the Istitlaa public consultation platform from September 3 to October 3.

 

Under the proposed regulation, anyone who violates a provision of the Real Estate Transaction Tax Law or its implementing regulations could face a fine of up to the amount of tax due or SR50,000, whichever is higher.

 

ZATCA said the draft is intended to classify violations and corresponding penalties related to real estate transaction tax, while improving governance, standardising enforcement procedures and increasing clarity and transparency for parties involved in property transactions.

 

Saudi Arabia’s Real Estate Transaction Tax is currently imposed at a rate of 5% on qualifying real estate transactions. The current law came into force on April 10, 2025.

 

The proposed penalties cover several forms of non-compliance. Failure to register a real estate transaction could attract a fine ranging from SR5,000 to SR50,000.

 

A similar fine range would apply to failure to retain the required tax documents and records within the legally prescribed periods.

 

Failure to co-operate with ZATCA during inspection procedures or to provide information requested by the authority could result in a fine ranging from SR1,000 to SR50,000.

 

The draft also covers cases where taxpayers prevent ZATCA employees from carrying out inspections. This includes refusing access to books, records, invoices or accounting documents, or preventing officials from making or retaining copies of documents required for inspection.

 

Such violations could also attract fines ranging from SR1,000 to SR50,000.

 

The draft further proposes fines of between SR1,000 and SR50,000 for violations of provisions contained in the implementing regulations or related bylaws.

 

ZATCA’s existing guidance states that providing incorrect information about the value of a real estate transaction, where this results in the non-payment or underpayment of tax, may be treated as a tax-evasion violation. The penalty under the existing framework can range from the amount of tax due to three times that amount.

 

The proposed classification would therefore provide a more detailed framework for determining penalties for different types of non-compliance with the real estate transaction tax regime.