{"id":545,"date":"2026-06-06T14:18:10","date_gmt":"2026-06-06T14:18:10","guid":{"rendered":"https:\/\/www.dariba.co\/?p=544"},"modified":"2026-06-06T14:18:10","modified_gmt":"2026-06-06T14:18:10","slug":"rett-exemption-for-security-and-guarantee-transfers","status":"publish","type":"post","link":"https:\/\/www.dariba.co\/?p=545","title":{"rendered":"RETT Exemption for Security and Guarantee Transfers in Saudi Arabia"},"content":{"rendered":"\n<style>\n\/* \u2500\u2500 DARIBA.CO \u2014 ARTICLE BODY STYLES (white background compatible) \u2500\u2500 *\/\n\n:root {\n  --green:        #059669;\n  --green-light:  #d1fae5;\n  --green-dim:    #ecfdf5;\n  --green-border: #6ee7b7;\n  --amber:        #d97706;\n  --amber-light:  #fffbeb;\n  --amber-border: #fcd34d;\n  --blue:         #2563eb;\n  --blue-light:   #eff6ff;\n  --blue-border:  #93c5fd;\n  --red:          #dc2626;\n  --text-primary: #111827;\n  --text-muted:   #6b7280;\n  --text-light:   #9ca3af;\n  --border:       #e5e7eb;\n  --surface:      #f9fafb;\n  --surface-2:    #f3f4f6;\n  --radius:       8px;\n  --radius-lg:    12px;\n}\n\n\/* \u2500\u2500 BASE \u2500\u2500 *\/\n.dariba-article {\n  font-family: 'DM Sans', -apple-system, BlinkMacSystemFont, 'Segoe UI', sans-serif;\n  font-size: 1rem;\n  line-height: 1.75;\n  color: var(--text-primary);\n  max-width: 780px;\n}\n\n.dariba-article p {\n  margin-bottom: 1.1rem;\n  color: var(--text-primary);\n  font-size: 0.975rem;\n}\n\n.dariba-article a {\n  color: var(--green);\n  text-decoration: underline;\n  text-underline-offset: 2px;\n}\n\n.dariba-article strong { color: var(--text-primary); 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color: #ffffff; }\n\n\/* \u2500\u2500 ALSO READING \u2500\u2500 *\/\n.dariba-article .also-reading {\n  margin: 2rem 0;\n}\n\n.dariba-article .also-reading h4 {\n  font-size: 0.72rem;\n  font-weight: 700;\n  text-transform: uppercase;\n  letter-spacing: 0.08em;\n  color: var(--text-muted);\n  margin-bottom: 1rem;\n}\n\n.dariba-article .also-cards {\n  display: grid;\n  grid-template-columns: 1fr 1fr;\n  gap: 0.875rem;\n}\n\n@media (max-width: 600px) {\n  .dariba-article .also-cards { grid-template-columns: 1fr; }\n}\n\n.dariba-article .also-card {\n  background: var(--surface);\n  border: 1px solid var(--border);\n  border-radius: var(--radius);\n  padding: 1rem;\n  text-decoration: none;\n  display: block;\n  transition: border-color 0.2s, box-shadow 0.2s;\n}\n\n.dariba-article .also-card:hover {\n  border-color: var(--green);\n  box-shadow: 0 2px 8px rgba(5,150,105,0.08);\n}\n\n.dariba-article .also-card .also-label {\n  font-size: 0.68rem;\n  font-weight: 700;\n  text-transform: uppercase;\n  color: var(--green);\n  letter-spacing: 0.08em;\n  margin-bottom: 0.35rem;\n}\n\n.dariba-article .also-card .also-title {\n  font-size: 0.875rem;\n  font-weight: 600;\n  color: var(--text-primary);\n  line-height: 1.4;\n}\n\n\/* \u2500\u2500 DISCLAIMER \u2500\u2500 *\/\n.dariba-article .disclaimer {\n  font-size: 0.78rem;\n  color: var(--text-muted);\n  border-top: 1px solid var(--border);\n  padding-top: 1rem;\n  margin-top: 2.5rem;\n  font-style: italic;\n  line-height: 1.6;\n}\n<\/style>\n\n<!-- ARTICLE BODY \u2014 paste into WordPress HTML editor -->\n<div class=\"dariba-article\">\n\n<div class=\"article-meta\">\n  <span class=\"tag\">Tax Intelligence<\/span>\n  <span>RETT Exemptions<\/span>\n<\/div>\n\n<div class=\"series-banner\">\n  Part of <a href=\"https:\/\/www.dariba.co\/rett-exemptions-saudi-arabia\/\">RETT Exemptions in Saudi Arabia: The Complete Analysis<\/a> \u2014 Article 8 of 10\n<\/div>\n\n<p>Property-backed financing is everywhere in the Saudi market \u2014 Ijara structures, Murabaha home purchases, and security transfers where title moves to a financier as collateral. If every one of these movements triggered the 5% RETT charge, the cost of mortgage and lease financing would be unworkable. The law solves this with a focused exemption: a temporary transfer of property as a financing or credit guarantee, made by a licensed entity, is exempt \u2014 provided it stays temporary. The moment a security transfer becomes permanent, the exemption falls away.<\/p>\n\n<p>This article explains how the financing-guarantee exemption works, what happens on default, how bank-to-bank refinancing is treated, and how the regime ensures a financed property is ultimately taxed only once.<\/p>\n\n<!-- SECTION 01 -->\n<div class=\"section-block\" id=\"problem\">\n  <div class=\"section-number\">\n    <span class=\"section-num-badge\">01<\/span>\n    <h2>The Problem the Exemption Solves<\/h2>\n  <\/div>\n  <p>In Sharia-compliant financing, the legal title to a property often has to move \u2014 sometimes more than once \u2014 to make the structure work. In an Ijara (lease-to-own) arrangement, a financier may take title and lease the asset back to the customer. In a security arrangement, title or a registered interest moves to the lender as collateral for a loan. None of these movements represents a genuine economic sale; they are mechanics of financing.<\/p>\n  <p>The Regulations recognise this. A <strong>temporary transfer of real estate as a guarantee for financing or credit<\/strong>, carried out by an entity licensed to provide such financing, is exempt from RETT. The key words are <em>temporary<\/em> and <em>licensed<\/em>.<\/p>\n  <div class=\"callout callout-info\">\n    <div class=\"callout-label\">Two Anchors<\/div>\n    <p><strong>Temporary:<\/strong> the transfer is a security mechanism, expected to reverse once the financing is settled. <strong>Licensed:<\/strong> the financing party must be authorised to provide this kind of financing. Both anchors must hold for the exemption to apply.<\/p>\n  <\/div>\n<\/div>\n\n<!-- SECTION 02 -->\n<div class=\"section-block\" id=\"core\">\n  <div class=\"section-number\">\n    <span class=\"section-num-badge\">02<\/span>\n    <h2>The Core Case \u2014 A Temporary Security Transfer<\/h2>\n  <\/div>\n  <p>The straightforward application: a borrower&#8217;s property is transferred to a licensed financier as security for a financing facility, on the basis that title returns once the obligation is discharged.<\/p>\n  <div class=\"callout\">\n    <div class=\"callout-label\">Example 31 \u2014 Security Transfer to a Licensed Financier<\/div>\n    <p>Property is transferred to a licensed financing entity as a guarantee for financing. Because the transfer is temporary and the financier is licensed, it is exempt from RETT. The transfer is collateral, not a sale.<\/p>\n  <\/div>\n  <p>This is the backbone of property-secured lending in the Kingdom. Without it, taking a mortgage would itself be a 5% taxable event \u2014 an absurd result that the exemption deliberately prevents.<\/p>\n<\/div>\n\n<!-- SECTION 03 -->\n<div class=\"section-block\" id=\"default\">\n  <div class=\"section-number\">\n    <span class=\"section-num-badge\">03<\/span>\n    <h2>When Temporary Becomes Permanent \u2014 Default<\/h2>\n  <\/div>\n  <p>The exemption is built on the assumption that the security transfer is temporary. If that assumption fails \u2014 most commonly when the borrower defaults and the financier ends up keeping the property \u2014 the transfer is no longer temporary. It has become a permanent acquisition, and the exemption no longer protects it.<\/p>\n  <div class=\"callout callout-warning\">\n    <div class=\"callout-label\">Example 32 \u2014 Default Turns Collateral into a Taxable Transfer<\/div>\n    <p>A borrower defaults, and the property that was transferred as security becomes permanently owned by the financier rather than returning to the borrower. Because the transfer is now permanent, it is no longer an exempt temporary security transfer \u2014 RETT becomes due on it.<\/p>\n  <\/div>\n  <p>This is the defining boundary of the exemption. It protects the <em>financing<\/em> use of a title transfer, not the financier&#8217;s eventual ownership of the asset when a loan goes bad. Once the property is permanently absorbed, the regime treats it as a real estate transfer subject to tax.<\/p>\n<\/div>\n\n<!-- SECTION 04 -->\n<div class=\"section-block\" id=\"bank-to-bank\">\n  <div class=\"section-number\">\n    <span class=\"section-num-badge\">04<\/span>\n    <h2>Refinancing and Bank-to-Bank Transfers<\/h2>\n  <\/div>\n  <p>Financing is not static. Customers refinance; facilities are transferred between financiers; an Ijara book may move from one institution to another. The exemption is designed to keep these movements tax-neutral, because they remain part of the financing arrangement rather than a genuine onward sale of the property.<\/p>\n  <div class=\"callout\">\n    <div class=\"callout-label\">Examples 33 and 34 \u2014 Movements Within Financing<\/div>\n    <p>Transfers of financed property between licensed financing entities \u2014 including refinancing arrangements and movements of property held under an Ijara structure from one financier to another \u2014 remain within the temporary-financing-guarantee exemption. The property is still serving as security within a licensed financing arrangement, so the transfer is exempt.<\/p>\n  <\/div>\n  <p>The thread running through Examples 33 and 34 is continuity of purpose. As long as the property continues to function as financing collateral held by a licensed entity, moving it between financiers does not create a taxable sale.<\/p>\n<\/div>\n\n<!-- SECTION 05 -->\n<div class=\"section-block\" id=\"taxed-once\">\n  <div class=\"section-number\">\n    <span class=\"section-num-badge\">05<\/span>\n    <h2>The &#8220;Taxed Only Once&#8221; Principle<\/h2>\n  <\/div>\n  <p>Financing structures often require two title movements in quick succession \u2014 for example, a financier acquiring a property and immediately transferring it on to the customer under a Murabaha or Ijara arrangement, sometimes captured in a single deed. Taxing each leg separately would double the charge on what is, economically, one acquisition by the end customer.<\/p>\n  <p>The Regulations address this directly: where a financing transaction involves two transfers of the same property to give effect to a single financing (such as a Murabaha purchase or an Ijara), RETT is applied <strong>only once<\/strong>.<\/p>\n  <div class=\"callout\">\n    <div class=\"callout-label\">Example 62 \u2014 One Charge, Not Two<\/div>\n    <p>In a financing arrangement where the property is first transferred to the financier and then to the end customer to complete a Murabaha or Ijara, the two transfers are treated as giving effect to a single financing \u2014 and RETT is charged only once, not on both legs.<\/p>\n  <\/div>\n  <div class=\"callout callout-info\">\n    <div class=\"callout-label\">Financing Profit Is Not in the Base<\/div>\n    <p>A related point: the financier&#8217;s profit margin built into a Murabaha or Ijara \u2014 the financing cost \u2014 is not part of the RETT base. RETT attaches to the value of the property transfer, not to the embedded financing return.<\/p>\n  <\/div>\n<\/div>\n\n<!-- SECTION 06 -->\n<div class=\"section-block\" id=\"transitional\">\n  <div class=\"section-number\">\n    <span class=\"section-num-badge\">06<\/span>\n    <h2>A Transitional Note on Pre-Existing Leases<\/h2>\n  <\/div>\n  <p>When the RETT regime came into force, financing structures already in flight needed a bridge. The Regulations include a transitional rule for the completion of <strong>Ijara and finance-lease arrangements entered into before the law&#8217;s effective date<\/strong> \u2014 allowing the final transfer that completes such a pre-existing arrangement to be treated consistently rather than caught as a fresh taxable event.<\/p>\n  <div class=\"callout\">\n    <div class=\"callout-label\">Example 35 \u2014 Completing a Pre-Effective-Date Lease<\/div>\n    <p>An Ijara (finance lease) that began before the effective date reaches its final transfer of title to the customer after the law is in force. The transitional rule allows that completing transfer to be treated under the financing logic, so the pre-existing arrangement is honoured rather than penalised by the new regime.<\/p>\n  <\/div>\n  <p>If you are completing a financing arrangement that pre-dates the regime, the timing and origin of the structure matter \u2014 keep the original documentation, because it determines how the completing transfer is treated.<\/p>\n<\/div>\n\n<!-- FAQ -->\n<div class=\"section-block\" id=\"faq\">\n  <div class=\"section-number\">\n    <span class=\"section-num-badge\">07<\/span>\n    <h2>Frequently Asked Questions<\/h2>\n  <\/div>\n  <div class=\"faq-list\">\n    <div class=\"faq-item\">\n      <button class=\"faq-q\">Does taking out a mortgage trigger RETT?<span class=\"faq-icon\">+<\/span><\/button>\n      <div class=\"faq-a\"><p>No. A temporary transfer of property as security for financing, made by a licensed financing entity, is exempt. The transfer is collateral within a financing arrangement, not a sale (Example 31).<\/p><\/div>\n    <\/div>\n    <div class=\"faq-item\">\n      <button class=\"faq-q\">What happens if I default and the lender keeps the property?<span class=\"faq-icon\">+<\/span><\/button>\n      <div class=\"faq-a\"><p>Then the security transfer is no longer temporary \u2014 it has become a permanent acquisition by the financier, and RETT becomes due on it (Example 32). The exemption only protects temporary security transfers.<\/p><\/div>\n    <\/div>\n    <div class=\"faq-item\">\n      <button class=\"faq-q\">Is refinancing or moving my facility to another bank a taxable event?<span class=\"faq-icon\">+<\/span><\/button>\n      <div class=\"faq-a\"><p>No. Transfers of financed property between licensed financiers \u2014 including refinancing and movements under an Ijara structure \u2014 remain within the financing-guarantee exemption, because the property is still serving as collateral in a licensed arrangement (Examples 33 and 34).<\/p><\/div>\n    <\/div>\n    <div class=\"faq-item\">\n      <button class=\"faq-q\">In a Murabaha or Ijara, the property is transferred twice. Is RETT charged twice?<span class=\"faq-icon\">+<\/span><\/button>\n      <div class=\"faq-a\"><p>No. Where two transfers give effect to a single financing, RETT is charged only once (Example 62). The financier&#8217;s profit margin is also outside the RETT base.<\/p><\/div>\n    <\/div>\n    <div class=\"faq-item\">\n      <button class=\"faq-q\">I have a finance lease that started before the RETT law. How is the final transfer treated?<span class=\"faq-icon\">+<\/span><\/button>\n      <div class=\"faq-a\"><p>A transitional rule allows the completing transfer of a pre-effective-date Ijara or finance lease to be treated under the financing logic (Example 35). Keep the original lease documentation, as the start date and structure determine the treatment.<\/p><\/div>\n    <\/div>\n  <\/div>\n<\/div>\n\n<!-- TAKEAWAYS -->\n<div class=\"takeaways\">\n  <div class=\"takeaways-title\">&#9670; Key Takeaways<\/div>\n  <ol>\n    <li>A temporary transfer of property as security for financing or credit, made by a licensed financing entity, is exempt from RETT (Example 31).<\/li>\n    <li>If the transfer becomes permanent \u2014 typically on default, when the financier keeps the property \u2014 the exemption is lost and RETT is due (Example 32).<\/li>\n    <li>Refinancing and bank-to-bank transfers of financed property stay within the exemption, because the collateral function continues (Examples 33\u201334).<\/li>\n    <li>Where two transfers complete a single financing (Murabaha\/Ijara), RETT is charged only once, and the financing profit margin is outside the base (Example 62).<\/li>\n    <li>A transitional rule preserves consistent treatment for the completion of finance leases entered into before the law&#8217;s effective date (Example 35).<\/li>\n  <\/ol>\n<\/div>\n\n<!-- SERIES FOOTER -->\n<div class=\"series-footer\">\n  <p>This article is part of a ten-part analysis of RETT exemptions in Saudi Arabia.<\/p>\n  <a class=\"btn-primary\" href=\"https:\/\/www.dariba.co\/rett-exemptions-saudi-arabia\/\">Read the Complete Guide \u2192<\/a>\n<\/div>\n\n<!-- ALSO READING -->\n<div class=\"also-reading\">\n  <h3>Continue Reading<\/h3>\n  <div class=\"also-cards\">\n    <a class=\"also-card\" href=\"https:\/\/www.dariba.co\/rett-public-entity-government-exemption-saudi-arabia\/\">\n      <span class=\"also-card-tag\">Article 7<\/span>\n      <span class=\"also-card-title\">RETT Exemption for Public Entities and Government Bodies<\/span>\n    <\/a>\n    <a class=\"also-card\" href=\"https:\/\/www.dariba.co\/rett-bequest-will-saudi-arabia\/\">\n      <span class=\"also-card-tag\">Article 9<\/span>\n      <span class=\"also-card-title\">RETT Exemption for Notarized Wills, Bequests and Inheritance<\/span>\n    <\/a>\n  <\/div>\n<\/div>\n\n<!-- DISCLAIMER -->\n<div class=\"disclaimer\">\n  <p>This article is based on the Real Estate Transaction Tax Law (Royal Decree No. M\/84), its Implementing Regulations (Board Resolution No. 01-03-25 dated 24\/09\/1446H), and ZATCA&#8217;s Detailed Guideline for RETT. It is provided for general information only and does not constitute tax or legal advice. dariba.co is an independent platform with no consulting relationships.<\/p>\n<\/div>\n\n<\/div>\n\n<script>\ndocument.querySelectorAll('.dariba-article .faq-q').forEach(function(btn) {\n  btn.addEventListener('click', function() {\n    btn.parentElement.classList.toggle('open');\n  });\n});\n<\/script>\n\n","protected":false},"excerpt":{"rendered":"<p>Tax Intelligence RETT Exemptions Part of RETT Exemptions in Saudi Arabia: The Complete Analysis \u2014 Article 8 of 10 Property-backed financing is everywhere in the Saudi market \u2014 Ijara structures, Murabaha home purchases, and security transfers where title moves to a financier as collateral. If every one of these movements triggered the 5% RETT charge, [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,7],"tags":[],"class_list":["post-545","post","type-post","status-publish","format-standard","hentry","category-rett","category-rett-exemptions"],"_links":{"self":[{"href":"https:\/\/www.dariba.co\/index.php?rest_route=\/wp\/v2\/posts\/545","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.dariba.co\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.dariba.co\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.dariba.co\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.dariba.co\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=545"}],"version-history":[{"count":0,"href":"https:\/\/www.dariba.co\/index.php?rest_route=\/wp\/v2\/posts\/545\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.dariba.co\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=545"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.dariba.co\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=545"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.dariba.co\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=545"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}