Real Estate Transaction Tax Saudi Arabia: How to Object

You sold land in north Riyadh for SAR 1.2 million and paid the 5% real estate transaction tax (RETT) before the transfer. A year later ZATCA notifies you that the fair market value was SAR 1.6 million, the extra tax is SAR 20,000, and a fine is added. Do you pay, object, and where?

The direct answer: first file a grievance with ZATCA within 60 days of notification; ZATCA must decide within 90 days. If it rejects or stays silent, you object within 30 days before the competent judicial body. Royal Decree M/84 dated 19/3/1446H names that body: the primary and appellate committees under the Income Tax Law, which today are the first-level and appellate circuits of the Zakat, Tax and Customs Committees. If you miss these periods, the decision becomes final (Article 17 of the Real Estate Transaction Tax Law).

Which body hears real estate transaction tax disputes?

Article 17 refers to the competent judicial body without naming it; item 2 of the issuing decree names the Income Tax Law committees. Those committees were re-formed under Article 67 of the Income Tax Law as amended and work under the Rules of Work of the Zakat, Tax and Customs Committees (Royal Order No. 25711 dated 8/4/1445H), whose Article 3 gives the zakat and tax circuits jurisdiction over objections to ZATCA decisions under the tax laws.

Outside their jurisdiction: your dispute with the buyer over who pays the tax. The law makes the seller (the disposer, al-mutasarrif) liable to ZATCA, and the buyer jointly liable if he caused the non-payment (Article 7). A private agreement to share the tax is a contract matter for the court competent for the sale contract. A refusal to register the sale in the real estate register is also different: the grievance goes to the Real Estate General Authority and then the competent court under the Real Estate Registration Law, not to the tax committees.

Which decisions can be challenged?

• Recalculation of the tax because the declared value was below fair market value; ZATCA may do this within three years from the transaction date (Article 8), and may use an accredited valuer.
• Valuation of a transaction with no stated value, or tax on an undocumented or undisclosed transaction.
• Refusal of an exemption under Article 3, such as division of an estate, a documented gift to a spouse or relatives up to the third degree, expropriation, a forced sale ordered by a court, or transfer to a company wholly owned by the transferor, subject to its conditions.
• Refusal to refund tax paid in excess, in error or on an incomplete transaction, or on a transaction cancelled by mutual consent within 90 days of documentation with full refund of the price and no change in the property (Articles 9 and 3(a)(21)).
• Penalty decisions under Article 15.

What are the RETT penalties?

Sham or hidden transactions are taxed on the real transaction (Article 6). Writing a lower price in the contract can turn a valuation dispute into suspected evasion, and the taxpayer carries the burden of proving there was no intent (Article 14).

What are the deadlines?

1. Grievance to ZATCA within 60 days of notification.
2. ZATCA decides within 90 days of filing.
3. After rejection or 90 days without a decision: 30 days to object before the first-level circuits. Under the Rules you may instead, within the same period, ask for referral to the internal settlement committee (Rules, Article 5).
4. Appeal within 30 days from the day after receiving the first-level decision, unless the amounts are SAR 50,000 or less, in which case it is final (Rules, Articles 33 and 34).

The RETT implementing regulation sets out the detailed procedures, as Article 17 provides.

How do I prove the price was fair?

The law defines fair market value as the price at which the property could be traded in an open market between independent parties, for a similar transaction or one close to approved real estate indicators (Article 1). Your objection is stronger with evidence from the time of sale:

• A report from an accredited valuer dated close to the transaction.
• Similar sales in the same district, of similar size, at the time.
• Defects that reduce value: plot shape, setbacks, disputes, a mortgage, no services.
• Sale circumstances: an urgent sale to pay a debt, or a sale to an independent buyer after an open offer.

For the land sold at SAR 1.2 million, the seller filed his grievance on day 30 with an accredited valuer's report at SAR 1.25 million, photos showing a flood channel crossing the land, and three nearby sales from the same year. ZATCA stayed silent for 90 days, so he objected before the first-level circuit within the next 30 days. Because the disputed tax and fine together did not exceed SAR 50,000, the circuit's decision would be final, so he filed all his evidence at the first stage.

Practical steps for both sides

If you are the seller (legally liable for the tax):

• Write the real price in the contract and keep proof that it matched the market at the time.
• If you receive a recalculation decision, file a grievance within 60 days before monthly fines build up.
• If the transaction is exempt, claim the exemption with its supporting document at documentation, and respect its time conditions.
• If the sale is cancelled by consent, check the 90-day window and refund conditions before signing the cancellation.

If you are the buyer:

• Make sure the tax is paid before the transfer; documentation is not allowed before payment (Article 19).
• Do not take part in lowering the written price; you may become jointly liable if you caused non-payment (Article 7).
• If you agreed to bear the tax, write it clearly, including who pays any difference ZATCA claims later.
• Keep the payment receipt and the contract; you may be asked for them within three years.

This is general information based on the official Arabic texts of Saudi laws, which prevail over any translation. It is not legal advice for your specific case.

If ZATCA revalued your property, refused an exemption or imposed a fine, send the decision and the sale contract on WhatsApp so we can go through your grounds and deadlines with you.