RETT Exemptions in Saudi Arabia: Conditions, Holding Periods and Examples
The short answer
Most RETT exemptions come with conditions that last after the transfer: a free gift must not be passed on to a non-qualifying person within 3 years, and transfers into companies, funds, mergers and groups require ownership to stay unchanged for 5 years. Breaching a condition makes the tax due within 30 days, whatever the normal review period.
Key facts
Waqf and charity exemptions cover only free transfers; sales to them are taxable.
Source:RETT Law Art. 3(a)(2) [T02-0431]RETT Law Art. 3(a)(3) [T02-0432]Sales to public bodies are exempt whatever the buyer uses the property for.
Source:RETT Law Art. 3(a)(4) [T02-0433]A will exemption needs a notarised will.
Source:RETT Law Art. 3(a)(8) [T02-0437]An IPO, a court-ordered forced sale or an exempt merger does not break a 5-year holding condition.
Source:IR Art. 3 [T02-0455]Trading units of an unlisted real estate fund is exempt where less than 50% of its units change hands.
Source:RETT Law Art. 3(a)(9) [T02-0454]
Gifts, waqf, charities and public bodies
The waqf exemption covers only the first, free transfer to a registered waqf; a sale to a waqf, a long usufruct granted to it, or its later transfers are taxable.
Source:RETT Law Art. 3(a)(2) [T02-0431]The charity exemption covers only free transfers to or from a licensed charity; ZATCA checks that the transfer is free and the charity licensed.
Source:RETT Law Art. 3(a)(3) [T02-0432]Disposals by a public body are exempt only when made as a public authority under its statutory powers — not when it sells on commercial terms.
Source:RETT Law Art. 3(a)(5) [T02-0434]Expropriation for public benefit is exempt only under the approved statutory procedures.
Source:RETT Law Art. 3(a)(6) [T02-0435]Diplomatic exemptions apply only where the other country gives Saudi missions the same treatment.
Source:RETT Law Art. 3(a)(12) [T02-0443]
Companies, funds and groups
In-kind contribution to a company’s capital: keep the shares 5 years and keep audited financial statements throughout; selling inside 5 years makes the contribution taxable.
Source:RETT Law Art. 3(a)(11) [T02-0442]Contribution to a real estate investment fund: keep the units until the fund ends or for 5 years, whichever is earlier.
Source:RETT Law Art. 3(a)(13) [T02-0456]Acquisition by share exchange: all interests, share-only consideration, a 5-year hold and a single transaction — a staged deal fails.
Source:RETT Law Art. 3(a)(16) [T02-0448]Transfers to a company 100% owned by a waqf are exempt if the waqf’s ownership does not change for 5 years.
Source:RETT Law Art. 3(a)(20) [T02-0452]Temporary transfers between a real estate fund and its custodian are exempt under the Capital Market rules.
Source:RETT Law Art. 3(a)(10) [T02-0441]
Financing and security
A temporary transfer to a licensed financier as security, and the transfer back after repayment, are exempt; if the financier keeps the property after a default, the transfer becomes permanent and is taxed.
Source:RETT Law Art. 3(a)(14) [T02-0438]Moving a portfolio of title deeds from a bank to a refinancing company is also treated as a temporary security transfer.
Source:RETT Law Art. 3(a)(14) [T02-0439]
Transitional rules
For disposals before 10 April 2025, ZATCA has 3 years from that date (or from discovery) to review undervalued or undeclared deals, and old-regime refunds had to be claimed within 12 months of it.
Source:RETT IR Art. 14(a)-(c) [T02-0427]A partner who transferred property to his company before RETT but never notarised it had one Hijri year to notarise it exempt, with proof that it was a company asset.
Source:Guideline v6 s.5.1.15 and Examples 41-42 (p.37) [T02-0445]
Frequently asked questions
Is a sale to a waqf exempt?
No. Only the first transfer to a registered waqf, made free of any consideration, is exempt. A sale to a waqf, a usufruct over 50 years granted to it, or any later transfer by the waqf is taxable at 5%.
A government body is buying our property for commercial use. Is it exempt?
Yes. Sales to a public agency, a public legal person or an entity of public benefit are exempt whatever the buyer will use the property for, including revenue-earning use.
A government body is selling us a property. Is that exempt?
Only if it acts as a public authority under its statutory powers. A public agency selling under a commercial investment programme charges 5%.
Which relatives qualify for the gift exemption?
Spouse and relatives up to the third degree: parents and children; siblings, grandparents and grandchildren; and uncles, aunts, nephews and nieces. Cousins are not included.
We plan to sell shares received for an in-kind contribution after 4 years. What happens?
Selling inside 5 years makes the original contribution taxable. Selling after 5 years keeps the exemption, provided the company kept audited financial statements throughout.
Does a cash payment to a dissenting shareholder affect a merger exemption?
Cash or assets paid to a dissenting shareholder for exit are outside the exemption and taxable. Any cash or in-kind extra in the merger consideration makes the merger itself taxable.
Does an IPO break a 5-year holding condition?
No. A change in ownership through an IPO under the Capital Market Law, an exempt court-ordered forced sale, or an exempt merger or acquisition is not treated as a breach, as long as the resulting interests are held for the rest of the period.
The bank kept our property after we defaulted. Is RETT due?
Yes. The temporary security transfer was exempt, but if the financier keeps the property to recover the debt, the transfer becomes permanent and is taxed at 5%.
Is a forced sale by a liquidator exempt?
Sales under a competent court’s forced-sale order in liquidation or administrative liquidation under the Bankruptcy Law are exempt, including where the liquidator executes the sale directly.
General information only, not tax or legal advice. Laws change; check the official Arabic text or speak to a qualified adviser before acting.
Rules cited on this page
Each statement above names the library row it comes from. The law and article, the date the row was last verified against the official source, and a link to the official text where one is held are listed here.
| Row | Law / article | Verified on | Official text |
|---|---|---|---|
| T02-0414 | RETT Law Art. 8(1)-(6) | 2026-10-04 | — |
| T02-0422 | RETT IR Art. 3(a)(7), (11), (13), (16)-(18), (20); Art. 5(a)(2) | 2026-10-04 | — |
| T02-0425 | RETT IR Art. 4 and Art. 5 | 2026-10-04 | — |
| T02-0427 | RETT IR Art. 14(a)-(c) | 2026-10-04 | — |
| T02-0431 | RETT Law Art. 3(a)(2); RETT Guideline v6 s.5.1.2 and Examples 17-18 (p.25) | 2026-10-04 | — |
| T02-0432 | RETT Law Art. 3(a)(3); Guideline v6 s.5.1.3 and Examples 19-20 (pp.25-26) | 2026-10-04 | — |
| T02-0433 | RETT Law Art. 3(a)(4); Guideline v6 s.5.1.4 and Examples 21-22 (pp.26-27) | 2026-10-04 | — |
| T02-0434 | RETT Law Art. 3(a)(5); Guideline v6 s.5.1.5 and Examples 23-24 (pp.27-28) | 2026-10-04 | — |
| T02-0435 | RETT Law Art. 3(a)(6); Guideline v6 s.5.1.6 and Example 25 (pp.28-29) | 2026-10-04 | — |
| T02-0436 | RETT Law Art. 3(a)(7); IR Art. 3(a)(7); Guideline v6 s.5.1.7 and Examples 26-29 (pp.29-31) | 2026-10-04 | — |
| T02-0437 | RETT Law Art. 3(a)(8); Guideline v6 s.5.1.8 and Example 30 (p.31) | 2026-10-04 | — |
| T02-0438 | RETT Law Art. 3(a)(14); Guideline v6 s.5.1.9 and Examples 31-33 (pp.31-32) | 2026-10-04 | — |
| T02-0439 | RETT Law Art. 3(a)(14); Guideline v6 s.5.1.9 and Example 34 (p.33) | 2026-10-04 | — |
| T02-0441 | RETT Law Art. 3(a)(10); Guideline v6 s.5.1.11 (p.34) | 2026-10-04 | — |
| T02-0442 | RETT Law Art. 3(a)(11); IR Art. 3(a)(11); Guideline v6 s.5.1.12 and Examples 36-38 (pp.34-35) | 2026-10-04 | — |
| T02-0443 | RETT Law Art. 3(a)(12); Guideline v6 s.5.1.13 and Example 39 (pp.35-36) | 2026-10-04 | — |
| T02-0445 | Guideline v6 s.5.1.15 and Examples 41-42 (p.37) | 2026-10-04 | — |
| T02-0446 | RETT Law Art. 3(a)(15); Guideline v6 s.5.1.16 and Example 43 (p.38) | 2026-10-04 | — |
| T02-0447 | RETT Law Art. 3(a)(16); IR Art. 3(a)(16); Guideline v6 s.5.1.17(A) and Examples 44-47 (pp.38-40) | 2026-10-04 | — |
| T02-0448 | RETT Law Art. 3(a)(16); IR Art. 3(a)(16); Guideline v6 s.5.1.17(B) and Example 48 (p.41) | 2026-10-04 | — |
| T02-0452 | RETT Law Art. 3(a)(20); Guideline v6 s.5.1.21 and Example 56 (p.45) | 2026-10-04 | — |
| T02-0454 | RETT Law Art. 3(a)(9); Guideline v6 s.5.1.23 and Examples 58-59 (pp.46-47) | 2026-10-04 | — |
| T02-0455 | IR Art. 3; Guideline v6 s.5.1.23 closing paragraph and Example 60 (p.47) | 2026-10-04 | — |
| T02-0456 | RETT Law Art. 3(a)(13); IR Art. 3(a)(13); Guideline v6 s.5.1.24 and Example 61 (p.48) | 2026-10-04 | — |
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