In brief
A transfer of real estate by any person to a real estate developer licensed for off-plan sales and rental is exempt from RETT, provided the developer holds its licence on or before the transaction date and the property is allocated to an off-plan project whose licensing decision has been issued. If the project licence is not issued by then, the transferor has 90 days to submit it, having paid the tax or lodged an equivalent guarantee.
Off-plan development is central to the Kingdom’s housing supply strategy, and every scheme starts with land. Article 3(a)(19) removes RETT from the land acquisition, whether the developer buys the land, receives it from a landowner partner, or takes it from a group company. That reduces the developer’s cost before construction starts.
The provision is also unusual among the Article 3 exemptions because it includes a procedure for licences that are still pending.
The Provision: Exact Text
ZATCA’s Detailed RETT Guideline covers this exemption at section 5.1.20.
What It Means in Plain English
The off-plan developer RETT exemption means that when you transfer land to a developer licensed for off-plan sales, for a licensed off-plan project, no RETT is due. If the project licence is still pending, you pay the RETT or lodge a guarantee, and then have 90 days to produce the licence and recover it.
Breaking Down the Provision
“By any person”
The transferor can be anyone: an individual landowner, a company, a fund, or the developer’s own group company. Sales for value are covered. There is no “without consideration” condition.
Condition (a): The developer’s licence
The developer must be licensed for off-plan sale and rental activities under the applicable regulations, on or before the transaction date. A developer that obtains its licence after the transaction date does not qualify. There is no grace period for the developer’s own licence.
Condition (b): The project licence
The property must be allocated to an off-plan project, and the competent authority must have issued a licensing decision for that project on or before the transaction date.
Conditions (c) to (e): The 90-day mechanism
If the project licence is pending:
- On or before the transaction date, the transferor pays the RETT or lodges a cash or bank guarantee for the same amount.
- The transferor has 90 days from the transaction date to submit the licensing decision to ZATCA.
- If it is submitted in time, the guarantee is released in full, or the tax is refunded under the refund procedure in Article 9.
- If it is not submitted in time, ZATCA may liquidate the guarantee as payment of the tax, and paid tax is not refunded.
ZATCA’s Position
In the Guideline’s Example 55, a person transfers property to a developer licensed for off-plan sales, and the property is licensed for an off-plan project. Exempt. ZATCA repeats the conditions and describes the aim as supporting off-plan projects.
Worked Examples
Example 1: Licences in place
A landowner sells land worth SAR 50,000,000 to a licensed off-plan developer. The project licensing decision was issued a month earlier. Exempt, saving SAR 2,500,000.
Example 2: Project licence pending, issued in time
The project licence is still pending at the transaction date. The landowner lodges a bank guarantee for SAR 2,500,000 and registers the transaction. The licence is issued on day 60 and submitted to ZATCA on day 62. The guarantee is released in full.
Example 3: Licence not obtained in 90 days
As in Example 2, but the licence is not issued until day 120. ZATCA may liquidate the guarantee, and SAR 2,500,000 becomes final tax. Had the landowner paid cash rather than lodging a guarantee, the payment would not be refundable after day 90.
Example 4: Developer not yet licensed
The developer’s own off-plan licence is issued two weeks after the transaction. Condition (a) fails, and the 90-day mechanism applies only to the project licence. The transfer is taxable.
Grey Areas
| Situation | Our view |
|---|---|
| Project cancelled after the exemption is granted | No express clawback in the text. ZATCA could still challenge an artificial arrangement under Article 6. |
| Part of the land allocated to the off-plan project, part retained for other uses | In our view, the exemption covers only the portion allocated to the licensed project. Split the deeds or values accordingly. |
| Landowner and developer in a JV where the landowner receives units on completion | The land transfer may be exempt under Article 3(a)(19). The handover of units to the landowner later is a separate taxable transaction unless exempt. |
Compliance Checklist
- Obtain the developer’s off-plan licence and confirm it is dated on or before the transaction.
- Obtain the project licensing decision. If it is pending, arrange payment of the RETT or a guarantee before the transaction.
- Register the transaction on ZATCA’s RETT portal, citing Article 3(a)(19).
- Submit the project licence to ZATCA within 90 days, and track the deadline closely.
- Put the licensing risk on the developer in the contract.
Common Mistakes
- Missing the 90-day deadline. Paid tax becomes non-refundable.
- Assuming the grace period also covers the developer’s own licence. It does not.
- Leaving the licensing risk with the landowner in the contract.
The Bottom Line
Article 3(a)(19) removes RETT from the land acquisition stage of off-plan development. Where the project licence is pending, the 90-day mechanism works, but the transferor carries the risk of delay. That risk should be priced and allocated in the land agreement. Compliance with this exemption is mainly about meeting deadlines.
Key takeaways
- Article 3(a)(19) exempts transfers of real estate by any person to a developer licensed for off-plan sale and rental activities.
- The developer's licence must be held on or before the transaction date, and the property must be allocated to an off-plan project.
- If the project licensing decision is not issued by the transaction date, the transferor must pay the tax or lodge a cash or bank guarantee, and then has 90 days to submit the licence to ZATCA.
- If the licence is submitted within 90 days, the guarantee is returned or the tax is refunded. If not, ZATCA may liquidate the guarantee, and paid tax is not refunded.
- The exemption covers sales for value, not only gifts. It is designed to make land available for off-plan housing supply.
- The later off-plan sales by the developer to buyers are separate transactions. They are taxable on notarization unless exempt, for example under first-home support.
Frequently asked questions
Is selling land to an off-plan developer subject to RETT in Saudi Arabia?
Not if the developer is licensed for off-plan sales and rental on or before the transaction date, and the land is allocated to an off-plan project whose licensing decision has been issued. Article 3(a)(19) of the RETT Implementing Regulations exempts the transfer, including sales for full value.
What if the project licence has not been issued when the land is transferred?
The transferor must pay the RETT, or lodge a cash or bank guarantee for the same amount, on or before the transaction date. They then have 90 days to submit the project licensing decision to ZATCA. If they do, the guarantee is returned or the tax refunded. If they do not, ZATCA may keep the guarantee as payment.
Who must hold the off-plan licence?
The developer receiving the land must be licensed to carry out off-plan sale and rental activities under the regulations in force, on or before the transaction date. The project itself also needs a licensing decision from the competent authority.
Does the exemption apply if the project is later cancelled?
The Regulations set conditions at the transaction date, plus the 90-day window. They do not set an express ongoing condition that the project must be completed. ZATCA could still examine a transaction that was structured purely to obtain the exemption, under its powers against deceptive arrangements (Article 6).
Are the developer's sales of off-plan units also exempt?
No, not under this provision. Off-plan sales to buyers are taxable real estate transactions, with RETT due on or before notarization of the transfer (Article 5(C)), unless another exemption or the first-home support applies.
Sources
Based on the RETT Law (Royal Decree No. M/84, effective 10 April 2025), the RETT Implementing Regulations (ZATCA Board Resolution No. 01-03-25 dated 24 March 2025, unofficial English translation) and ZATCA's Detailed RETT Guideline Version 6 (May 2026). The Arabic text prevails. This article is general information, not advice on any specific transaction. dariba.co is an independent knowledge platform and is not affiliated with ZATCA.
