Collecting Amounts Owed to Finance Entities for Previous Periods in Exchange for VAT on Real Estate Finance Contracts

Translated Document

Referring to The Value Added Tax Law issued by Royal Decree No. M/113 dated 2/11/1438 AH and Executive Regulations of the Value Added Tax Law issued by the Board of Directors of the General Authority for Zakat and Tax under Decision No. (3839) dated 14/12/1438 AH.

SAMA wishes to emphasize the importance for all finance entities to comply with The Value Added Tax Law, and its Executive Regulations, and the guidelines and instructions issued by the General Authority for Zakat and Tax in this regard. Additionally, SAMA confirms that finance entities have the right to demand that clients pay the Value Added Tax amounts due for previous periods from real estate finance contracts. To facilitate clients, finance entities may offer all possible options for payment or settlement in accordance with the relevant regulations and instructions, provided that written consent is obtained from the client if they accept any payment or settlement option before proceeding with any payment of the due amount. If the client does not accept the available options for settling the VAT amounts due for previous periods, the finance entity may seek recourse through the competent judicial authorities to claim the payment of those amounts.

For your information and compliance. SAMA will take the necessary legal measures in the event of non-compliance with these instructions.

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