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Without prejudice to the agreement or the system, the Minister of Finance may allow certain categories of persons who do not practice an economic activity or work in a specific economic activity to submit to the Authority a request to be considered as persons eligible for a tax refund. The Board of Directors or its authorized representative may issue a list of the names of persons eligible for a tax refund, and consider each of them qualified person.
This includes:
1- Licensed real estate developers.
2- Charitable associations and civil society institutions that provide their services for the public benefit and do not engage in economic activity to generate income.
3- Ministries, agencies and government agencies
4- Diplomatic missions and embassies
The recovery steps go through two main stages:
1- Submit applications to register as a person eligible for recovery
2- Submitting refund requests
Payback period:
• A refund request may be submitted at intervals (quarterly or calendar year) according to the registration request
• It is not permissible to submit more than one request for each refund
Refund period
• All refund requests must be submitted within a period not exceeding six months of the relevant year
• The total tax amount for each refund request must not be less than 1,000 Saudi riyals for each period
• There must be tax invoices for the taxes to be refunded
Special provisions regarding the mechanism for qualifying real estate developers to recover tax:
A Royal Order No.: A/84 was issued on 02-14-1442 AH approving the refund of the value-added tax on vacancies to licensed real estate developers after the entry into force of the provisions contained in this order, in accordance with the refund controls and relevant rules approved by the Minister of Finance
Conditions and controls that must be met by a licensed real estate developer:
1- That those who practice real estate development activity take one of the following regular forms:
A sole proprietorship with a commercial registry, a company in accordance with the provisions of the Companies Law, an investment fund, an institution, or a cooperative association.
2- The necessary license to practice his activity, issued by the Ministry of Commerce or a competent authority in the Kingdom; the license must be valid when he submits the application. He must also be licensed to practice any of the following:
Selling, renting, purchasing and developing real estate, buying, selling and dividing land and real estate on the map, constructing buildings.
3- To make exempt supplies in accordance with Article Thirty of the Executive Regulations, and the tax refund is limited to those supplies.
4- To obtain the approval of the Ministry of Municipal and Rural Affairs and Housing related regulations to be considered a qualified real estate developer.
5- The property subject to the real estate supply eligible for recovery must be owned by the real estate developer.
6- Or the real estate developer possesses that property as a buyer under a financial lease contract ending with ownership, or a lease contract ending with ownership.
Reference/ Citation
https://zatca.gov.sa/ar/HelpCenter/guidelines/Pages/default.aspx
