Refund of VAT to real estate developers in Saudi Arabia

The General Authority of Tax and Zakat (GAZT) issued Ministerial Decision No. 1754 which describes the rules and conditions for real estate developers to avail the refund on exempt real estate supplies. The exempt supplies shall be according to paragraph 1 (a) of article 30 of the KSA VAT implementing regulation.

To be eligible for availing the refund of VAT, the real estate developer must be organized as one of the following legal entities:

• A sole proprietorship under a commercial registry
• A real estate investment fund
• A cooperative organization or institution
• Any other legal entity under the companies’ law

Also, the real estate developer must hold a valid license approved by the Ministry of Commerce and by the relevant competent licensing and registration authorities.

The real estate developer must be licensed to conduct any of the following activities:

• Sale, lease, purchase, and development of real estate
• Sale, purchase, and partitioning of land and properties as well as off-plan sales and leasing
• Construction of buildings

Moreover, the real estate developer must be approved by the Ministry of Housing as an eligible real estate developer. GAZT will check that developers fulfill all the required conditions. 

However, Developers who do not qualify to  be treated as a licensed real estate developers can recover refund of VAT on the exempt real estate supplies if ALL the below mentioned provisions are satisfied:

• The real estate developer must have one of the legal forms listed under article 1 of the Ministerial Resolution
• It must satisfy all the other requirements to be a qualified as a licensed real estate developer before the January 31, 2021
• It must prove that input VAT recorded in its books was incurred is relation to real estate supplies of the legal entity according to the above mentioned legal forms.