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  • The Working Mechanism of Dealing with the Beneficiaries of First Home Regarding Tax Revenues

    No: 747280000067 Date(g): 25/8/2019 | Date(h): 24/12/1440Status: In-Force

    Translated Document

    Referring to the ongoing coordination between SAMA, the Ministry of Housing, and the General Authority of Zakat and Tax regarding the mechanism for refunding Value-Added Tax (VAT) on the first home.

    SAMA received a letter from His Excellency the Minister of Housing, No. 703, dated 20/12/1440H, which includes the approval of the VAT refund mechanism for the first home and requests its circulation to financing entities. The mechanism has been in effect since 01/08/2019G.

    Attached is the operational procedure for dealing with beneficiaries of the first home concerning tax revenues.

    • Responsibilities of the Citizen

      1. If the purchase is made through a financer, the beneficiary must provide the certificate to the financer and cover any additional tax amounts if the value of the residential unit exceeds 850,000 SAR. The beneficiary must also sign a commitment not to present it to any other financing entity, developer, or seller.
         
      2. If the purchase is made directly from a developer registered with the Authority, the beneficiary must provide the certificate to the developer and cover any additional tax amounts if the value of the residential unit exceeds 850,000 SAR. The beneficiary must also sign a commitment not to present it to any other financing entity or developer.
         
      3. If the purchase is made directly from a developer not registered with the Authority, no tax amounts are payable for the residential unit.

    • Responsibilities of Financing Entities

       

      1)If the purchase is made from a developer registered with the Authority:
       
        1.1. The financer will receive the certificate from the beneficiary and any additional tax amounts if the value of the residential unit exceeds 850,000 SAR. The beneficiary must also sign a commitment not to present the certificate to any other financing entity or developer. The financer will then issue a sales invoice for the full tax amount (certificate value + any additional tax amounts).
       
        1.2. The financer will provide the certificate and any additional tax amounts if the value of the residential unit exceeds 850,000 SAR to the developer, and will receive a purchase invoice for the full tax amount (certificate value + any additional tax amounts).
       
        1.3. The financer must record the full tax amount (certificate value + any additional tax amounts) for both sale and purchase in their tax declarations for the above-mentioned case.
       
      2)If the purchase is made from a developer not registered with the Authority.
       
        2.1. No tax amounts are to be paid to the developer.
       
        2.2.The financer should submit a refund request through the portal and attach the deed after transfer of ownership, the sales invoice, financing contract, and the Authority’s declaration confirming the developer’s tax registration eligibility.
       

       

    • Responsibilities of Sales and Development Entities Registered with the Zakat, Tax, and Customs Authority, whether individuals or companies:

      1)If the sale is made to a financing entity:
         2.3.The seller will receive the certificate from the financer and any additional tax amounts if the value of the residential unit exceeds 850,000 SAR. The seller will also obtain a commitment from the beneficiary through the financing entity, confirming that the certificate will not be presented to any other financing entity or developer. The seller will then issue a sales invoice for the full tax amount (certificate value + any additional tax amounts).
       
        2.4. The seller should submit a refund request through the portal, attaching the deed after the transfer of ownership and the sales invoice.
       
        2.5.The seller must record the full tax amount (certificate value + any additional tax amounts) for the sale in their tax declarations for the above-mentioned case.
       
      2)If the sale is made directly to the beneficiary:
       
        2.1. The seller will receive the certificate from the beneficiary and any additional tax amounts if the value of the residential unit exceeds 850,000 SAR. The beneficiary must also sign a commitment not to present the certificate to any other financing entity or developer. The seller will then issue a sales invoice for the full tax amount (certificate value + any additional tax amounts).
       
        2.2. The seller should submit a refund request through the portal, attaching the deed after the transfer of ownership and the sales invoice.
       
        2.3.The developer must record the full tax amount (certificate value + any additional tax amounts) for the sale in their tax declarations for the above-mentioned case.