Saudi Arabia exempts VAT on residential real estate, financial services

Saudi Arabia said that financial services and supply of residential real estate by way of lease or license will be exempt from value added tax (VAT), according to the Kingdom’s VAT executive regulations.

Financial services include the issue, transfer or receipt of, or any dealing with, money, any security for money or any note or order for the payment of money.

Other exempt financial services include the provision of any credit or credit guarantee, the operation of any current, deposit or savings account and financial instruments, such as derivatives, options, swaps, credit default swaps and futures.

Under the new regulations, exempt residential real estate are immovable property used or intended to be used as a home, such as houses, flats and apartments, or other real estate that are meant to be a person’s primary residence.

Meanwhile, VAT will be charged at zero percent on exports of goods and services to outside the GCC region; cargo and passenger transportation services from and to the Kingdom, and related supplies by sea, air and land.

Medicines and medical equipment as well as certain investment grade precious metals -such as gold, silver, of 99 percent purity which are also tradable on the global bullion market will be also exempt from VAT.

The Kingdom is set to implement 5 percent VAT from January 1, 2018.