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About This Glossary
RETT documentation — the Law, the Implementing Regulations, and ZATCA’s Detailed Guideline — uses precise legal and Islamic finance terminology that is not always immediately clear to practitioners working across multiple jurisdictions or disciplines. A misunderstood term can mean a misfiled transaction, an incorrectly applied exemption, or an unrecognised liability.
This glossary defines the key terms used in the RETT regime, sourced directly from Royal Decree M/84, ZATCA Board Resolution 01-03-25 (the Implementing Regulations), and ZATCA’s Detailed Guideline (Version 6, May 2026). Where a term has a specific statutory definition, that definition governs — and this glossary reflects it. Where a term is a general concept applied in the RETT context, a practical explanation is provided.
Terms are organised alphabetically. Click any term to expand the definition.
Source Note
All definitions are sourced from the RETT Law (Royal Decree M/84), the Implementing Regulations (ZATCA Board Resolution 01-03-25), and the ZATCA Detailed Guideline Version 6 (May 2026). Where the Implementing Regulations cross-reference other laws (e.g., the Income Tax Law for “Related Persons”, the Capital Market Law for “Custodian”), those definitions apply as they exist in the referenced legislation.
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Terms A – C
A notarisation professional accredited by the Ministry of Justice to authenticate real estate deeds. Along with the Notary Public (attached to the court system), the Accredited Notary is one of two authorised officials who can complete the notarisation required for real estate title transfers. The RETT payment confirmation (or exemption notice) must be presented to either the Notary Public or an Accredited Notary before the deed can be registered.
Defined in Article 1 of the Implementing Regulations as a transaction conducted through the exchange of shares (including securities) resulting in the acquisition of the entire shares of a real estate company, where both the transferor and the transferee are legal persons. This specific definition is used in the context of the merger/acquisition exemption under Article 3(16)(b) of the Regulations.
Cooperation under an agreement — whether binding or non-binding — or through an understanding, whether formal or informal, between persons aiming to dispose of shares in a real estate company. Related persons are deemed to be acting in agreement with each other unless proven otherwise. This concept is central to the 30% threshold calculation for triggering RETT on real estate company share transfers: if multiple persons act in agreement, their individual transfers are aggregated.
The party receiving the real estate in a transaction — the buyer in a sale, the recipient in a gift, the acquiring entity in a corporate restructuring. The assignee is not primarily liable for RETT (that obligation sits with the Assignor/Transferor), but can become jointly and severally liable if ZATCA determines the assignee caused the failure to pay.
The party disposing of the real estate — the seller in a sale, the donor in a gift, the distributing entity in a restructuring. The Assignor is the primary RETT obligor and is responsible for registering the transaction with ZATCA, generating the payment invoice, and settling the tax. The Assignor’s representative (where one is appointed) exercises these obligations on the Assignor’s behalf.
A contract under which each of the contracting parties is obligated to transfer, by way of exchange, ownership of property other than money. In a real estate barter — one party gives real estate in exchange for another asset or real estate — RETT applies to the real estate disposal at the fair market value of the real estate transferred. Both sides of a barter involving real estate are analysed for their RETT implications separately.
A project structure where a private party builds, owns, and operates a facility before transferring it to a government or other entity at the end of the concession period. For RETT purposes, the due date for a BOOT project transfer is the date of actual transfer of ownership — being the date on which all conditions required by the contract for the transfer of ownership are met. RETT is calculated on the fair market value of the real estate on that actual transfer date.
A contract that creates a voluntary mutual obligation between contracting parties in a give-and-take manner — to own an asset, benefit from a service or utility, or acquire a financial right. A standard property sale is a commutative contract: the seller gives real estate, the buyer gives money. RETT applies to the real estate disposed under a commutative contract at the agreed value (subject to FMV floor).
A request submitted through ZATCA’s electronic portal to correct real estate transaction data that was registered incorrectly or that has changed due to a breach of exemption conditions. Must be submitted within 30 days of the transferor becoming aware of the error or the exemption breach. If the correction results in additional RETT being due, payment is required by the applicable deadline. Defined in Article 1 of the Implementing Regulations.
Defined in the Implementing Regulations by reference to the Capital Market Law and its related regulations and bylaws — typically an entity that holds and safeguards assets (including real estate fund units) on behalf of investors. Certain temporary transfers between an investment fund and its custodian (or between custodians of the same fund) are exempt from RETT under Article 3(10) of the Regulations.
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Terms D – I
The RETT amount that has become payable in accordance with the Law and the Implementing Regulations. Defined in Article 1 of the Regulations. The due tax is distinct from a tax that has been declared but not yet become payable — it is the amount that has crystallised as a legal obligation and is subject to enforcement if unpaid.
See the Waqf entry below. The RETT Law and Regulations use both terms — “endowment” is the English translation of “Waqf.” Real estate transactions to and from registered Waqf (whether public, private, or joint) are exempt from RETT under specific conditions.
A real estate transaction that falls within one of the 21+ exemption categories listed in Article 3 of the Implementing Regulations. Exempt disposals are not free from RETT administrative obligations — they must still be registered with ZATCA through the portal, and ZATCA issues an exemption confirmation notice. Exemptions are not self-executing and many carry ongoing conditions that must be maintained to preserve the exemption status.
The value that would be agreed between unrelated, independent parties dealing at arm’s length in ordinary business conditions, taking into account the nature of the transaction and the actual ownership transfer date. FMV is the minimum base for RETT where the agreed transaction value is lower, and is the assessment reference used by ZATCA when verifying declared values. ZATCA uses approved real estate market indicators or accredited assessors to determine FMV.
Defined by reference to the Finance Lease Law (Royal Decree M/48): a contract where a lessor leases fixed or movable assets, services, benefits, or intangible rights to a lessee (in the lessor’s capacity as owner, or the ability to establish or own them), for the purpose of leasing them to others as a profession. Finance leases in the context of real estate ownership are subject to a specific RETT rule: the transaction is taxable only once (the first transfer from the original owner to the licensed financing entity), and RETT is not imposed again on the subsequent transfer to the ultimate buyer, provided the conditions in Article 2(l) of the Regulations are met.
A voluntary real estate transfer without monetary consideration. Gifts of real estate from a transferor to their spouse or relatives up to the third degree are exempt from RETT under Article 3(7) of the Regulations, provided the gift is documented and provided the donee does not re-dispose of the property to a non-qualifying person within three years of the documented gift date. Gifts to non-relatives or beyond the third degree are taxable at FMV (there being no agreed consideration).
An Islamic lease contract under which the lessor grants the lessee the intended specific benefit of the leased property for a specific period, in exchange for a known consideration. Ijara-to-own contracts (Islamic finance leases with a purchase option at the end) are treated similarly to Finance Leases for RETT — taxed only once on the first transfer, with the second transfer exempt if the conditions in Article 2(l) of the Regulations are satisfied. Straightforward Ijara leases (without a purchase element) attract VAT, not RETT, as they do not transfer ownership.
A share, unit, or ownership interest in a Real Estate Company. Under the RETT Law, the transfer of interests in a Real Estate Company is treated as an indirect transfer of the underlying real estate. RETT is triggered when a person or group acting in concert disposes of 30% or more of such interests over a three-year rolling period. The RETT base is the FMV of the company’s real estate portfolio multiplied by the percentage of interests transferred.
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Terms M – R
Defined in Article 1 of the Implementing Regulations as the merger of one or more existing legal persons into another existing legal person, or the merger of two or more existing legal persons to form a new legal person, in accordance with any provisions regulating mergers in the Kingdom. Real estate transfers arising from qualifying mergers are exempt from RETT under Article 3(16)(a) of the Regulations, provided the consideration is limited to shares, proportionality of ownership is maintained, and the resulting shares are retained for at least five years.
An Islamic finance contract that functions as cost-plus financing, where the seller (typically a bank) and buyer agree on the cost of an asset and the profit mark-up. In a Murabaha property transaction: the bank buys the property from the seller, then sells it to the buyer at a higher price (cost plus profit), typically payable in instalments. For RETT purposes, the Murabaha transaction is taxed only once — on the first transfer from the original owner to the licensed financing entity. The second transfer (from the bank to the buyer) is not separately taxed, provided the conditions of Article 2(l) are met. The bank’s profit margin is excluded from the RETT base.
The authentication of a real estate deed by a Notary Public or Accredited Notary, confirming the legal transfer of ownership. For standard property sales, notarization is the final step that completes the title transfer — the RETT payment confirmation (or exemption notice) must be presented before the notary will proceed. For off-plan sales, notarization occurs at completion and is the RETT due date trigger. For share transfers in real estate companies, notarization is not required and RETT must be managed proactively within the 30-day payment window.
The sale of a subdivided real estate unit before construction is complete, regulated by the Off-Plan Real Estate Projects Law (AH 1445). For RETT purposes, the due date for an off-plan sale is the date of notarization with the Notary Public or Accredited Notary — not the date of the off-plan purchase agreement. This is a deliberate policy choice to align the RETT obligation with the point of completed title transfer, not the earlier contractual agreement. RETT must be paid on or before the notarization date.
Defined in ZATCA’s Guideline as the right granting its holder all rights over a specific physical thing, enabling the right holder to exclusively enjoy all benefits of that specific physical thing, including the right to use, exploit, and dispose. The transfer of the ownership right over real estate is the principal trigger for RETT — it is the complete bundle of rights that passes from transferor to transferee in a standard property sale.
For RETT purposes: immovable property within the Kingdom, including land, all buildings and engineering structures permanently erected on land, and fixtures forming a fixed part of or permanently attached to a building. Also includes movable property placed by its owner within real estate they own, if intended for the permanent service or exploitation of that real estate (even if not physically affixed). The scope is broad and includes residential, commercial, industrial, and undeveloped properties; completed, under-construction, and off-plan assets; subdivided and undivided interests; and all other forms of real property situated in the Kingdom.
Any company, fund, or entity that directly or indirectly owns real estate within the Kingdom with the aim of generating revenues from it by selling or leasing, provided the total fair market value of such real estate is not less than 50% of the total fair market value of its assets — assessed either on the date of the share transfer, or at any time during the 365 days preceding that date. The Real Estate Company definition is the foundation of the look-through rule: transfers of interests in a Real Estate Company are treated as indirect transfers of the underlying real estate and are subject to RETT when the 30% threshold is met.
Any transaction that permanently transfers — directly or indirectly — the ownership of real estate or its benefit from one person to another, or transfers the right to benefit from real estate for a period exceeding 50 years. The transaction may arise from the meeting of two or more wills (bilateral — e.g., a sale) or from the individual will of the assignor (unilateral — e.g., a bequest). Transactions that do not involve a transfer of ownership or long-term benefit — such as standard operating leases — are not real estate transactions for RETT purposes.
Defined in Article 1 of the Implementing Regulations by reference to Article 64 of the Income Tax Law and the Transfer Pricing Bylaws. Related persons include entities under common control and entities with 50%+ cross-ownership of voting rights, capital, or income. Related persons are presumed to act in agreement with each other for the purposes of the Agreed Disposal definition (relevant to the 30% share transfer threshold). ZATCA has heightened scrutiny of real estate transactions between related persons when verifying declared values under Article 8.
Multiple transfers of a share in a real estate company by one or more persons, where the transfers are part of a single agreement or a series of transactions, or the persons disposing of shares act by agreement. Related transactions are aggregated for the purpose of applying the 30% threshold for RETT on real estate company share transfers. This prevents fragmentation of a single transaction into smaller tranches each below the threshold.
Any person who, under Sharia or Law, has the right to represent the Transferor before ZATCA. Defined broadly in Article 1 of the Implementing Regulations to include trustees, guardians, administrators of endowments, judicial guardians, liquidators, bankruptcy trustees, company representatives per their articles of incorporation, and representatives of legal persons per their governing regulations. A Representative can register and pay RETT on behalf of the Transferor, but the primary RETT obligation remains with the Transferor.
A formal request submitted to ZATCA asking for a ruling to clarify the tax treatment of a specific transaction under the RETT Law and Regulations. Under Article 12 of the Implementing Regulations, ZATCA may issue a ruling either upon request or on its own initiative. The ruling specifies the period for which it applies and is published at ZATCA’s discretion. ZATCA is bound by the content of its own rulings. A ruling request is a valuable risk management tool for complex or novel RETT positions — particularly for transactions involving new Islamic finance structures, cross-border arrangements, or ambiguous restructuring scenarios.
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Terms S – Z
As defined under the Capital Market Law, with the characteristics of equity or shareholding — including but not limited to shares and fund units. Trading of listed securities of a Real Estate Company on a licensed capital market in the Kingdom is exempt from RETT (Article 3(9)(b) of the Regulations). Subscription to publicly offered securities of a Real Estate Company in a public offering is also exempt. These exemptions reflect the policy of not burdening liquid capital market activity with RETT.
Defined broadly in Article 1 of the Implementing Regulations to include ownership or shareholding interests in properties, a legal person, or any type of partnership. This broad definition means that “shares” for RETT purposes includes LLC quotas, partnership interests, limited partnership interests, and fund units — not only joint stock company shares. The 30% threshold rule for Real Estate Company look-through applies to the transfer of “shares” in this broad sense.
An act performed by a person’s will with the aim of creating a specific legal effect. This legal effect consists of establishing, amending, or terminating a right in accordance with the Law’s provisions. A transaction may result from the meeting of two or more wills (bilateral — e.g., a sale contract) or from a unilateral will (e.g., a will/bequest). A real estate transaction for RETT purposes is one that transfers ownership, possession for ownership purposes, or the right to benefit from real estate for more than 50 years.
A real right that entitles the usufructuary to use and exploit property owned by another. Established by the parties’ will or by law, and may be restricted by a term or condition. For RETT purposes: a usufruct right granted for 50 years or less is a lease (VAT territory, not RETT). A usufruct right granted for more than 50 years is treated as a real estate transaction subject to RETT. The RETT base in this case is the higher of the present value of FMV of the right or the present value of the agreed total consideration. The RETT due date is the date the right is granted (with a 30-day cancellation window).
A mechanism under ZATCA’s administrative framework allowing taxpayers to proactively disclose past non-compliance with RETT obligations. Voluntary disclosure generally results in reduced penalty exposure compared to a ZATCA-initiated assessment. The specific terms and conditions for RETT voluntary disclosure are governed by ZATCA’s rules and procedures in effect at the time. For transferors who identify historical RETT non-compliance, voluntary disclosure should be considered before ZATCA’s three-year assessment window closes.
An Islamic endowment — a form of charitable trust where assets are dedicated to a specific purpose, typically religious or social, with the underlying assets preserved in perpetuity. Real estate transactions to a registered Waqf (public, private, or joint) — without cash or in-kind consideration — are exempt from RETT under Article 3(2) of the Regulations, provided the Waqf is registered with the relevant endowment authorities and subject to their supervision. Transactions from a Waqf are also exempt under the same provision. The Waqf registration condition is a strict eligibility requirement.
A formal RETT determination issued by ZATCA where it disagrees with the declared transaction value or identifies unreported RETT. ZATCA can issue an assessment within three years of the date of the disclosed transaction (or three years from ZATCA becoming aware of an undisclosed transaction). Before issuing an assessment, ZATCA must grant the transferor/transferee the opportunity to submit an accredited assessor’s valuation. The assessed amount is final if not challenged within the applicable objection period. ZATCA’s enforcement powers include seizure and collection under the Income Tax Law provisions.
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This glossary reflects the RETT Law (Royal Decree M/84, effective 10 April 2025), the RETT Implementing Regulations (ZATCA Board Resolution 01-03-25, 24 March 2025), and ZATCA’s Detailed Guideline Version 6 (May 2026). Definitions are sourced from or consistent with those authoritative documents. This glossary is for informational purposes only and does not constitute legal or tax advice. dariba.co is an independent platform with no consulting relationships.