Working Mechanism for First Home Beneficiaries Regarding Tax Revenues

In the Name of Allah, the Most Gracious, the Most Merciful Saudi Mortgage Fund Headquarters Office of the Governor's Deputy for Supervision

Reference No.: 74728 / 67
Date: 1440/12/24
Attachments: 2 pages

Attachments: 12-

Circular

Dear Sirs,

Peace, mercy, and blessings of God be upon you,

Subject: Working Mechanism for Dealing with First Home Beneficiaries Regarding Tax Revenues.

Reference is made to the coordination between the Fund, the Ministry of Housing, and the Zakat, Tax and Customs Authority regarding the mechanism for the refund of Value Added Tax (VAT) on the first home.

The Fund has received a letter from the Minister of Housing No. 703 dated 20/12/1440H, approving the mechanism for the refund of VAT on the first home, and requesting that it be circulated to financing entities, as it has been effective since 1/8/2019.

Attached is the Working Mechanism for Dealing with First Home Beneficiaries Regarding Tax Revenues.

For information and action.

Accept my regards,

Adir
Fayed bin Ibrahim Al-Shathri
Governor's Deputy for Supervision

Distribution Scope:

• Banks and banks operating in the Kingdom.
• Financing companies operating in the Kingdom.

P.O. Box 2992, Riyadh 11169, Phone: 4662300 - Fax: 4662543

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Working Mechanism for Dealing with First Home Beneficiaries Regarding Tax Revenues 31/07/2019

Citizen Responsibilities
(1) If the purchase is made through a financier, the beneficiary submits the certificate to the financier and any additional tax amounts if the value of the residential unit is higher than 850,000 SAR, and signs a commitment not to submit it to any other financing entity or any other developer or seller. (2) If the purchase is made directly from a developer registered with the Authority, the beneficiary submits the certificate to the developer and any additional tax amounts if the value of the residential unit is higher than 850,000 SAR, and signs a commitment not to submit it to any other financing entity or any other developer. (3) If the purchase is made directly from a developer not registered with the Authority, no tax amounts are paid for the residential unit.

Responsibilities of Financing Entities
(1) If the purchase is made from a developer registered with the Authority:
1.1 The financier receives the certificate from the beneficiary and any additional tax amounts if the value of the residential unit is higher than 850,000 SAR, and the beneficiary signs a commitment not to submit the certificate to any other financing entity or any other developer. The financier issues a sales invoice for the full tax value (certificate value + any additional tax amounts).
1.2 The financier submits the certificate and any additional tax amounts if the value of the residential unit is higher than 850,000 SAR to the developer, and receives a purchase invoice for the full tax value (certificate value + any additional tax amounts).
1.3 The financier registers the full tax value (certificate value + any additional tax amounts) for both sales and purchases in the aforementioned cases in their tax returns.
(2) If the purchase is made from a developer not registered with the Authority:
2.1 No tax amounts are paid to the developer.

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Responsibilities of Sales and Development Entities Registered with the Zakat, Tax and Customs Authority (individuals or companies):
(1) If the sale is made to a financing entity:
2.2 The seller receives the certificate from the financier and any additional tax amounts if the value of the residential unit is higher than 850,000 SAR. The seller receives the beneficiary's commitment through the financing entity not to submit the certificate to any other financing entity or any other developer, and issues a sales invoice for the full tax value (certificate value + any additional tax amounts).
2.3 The seller submits a refund request via the portal, attaching the title deed after clearance, the sales invoice, the financing contract, and the Authority's declaration that the developer is not entitled to tax registration.
2.4 The seller submits a refund request via the portal, attaching the title deed after clearance and the sales invoice.
2.5 The seller registers the full tax value (certificate value + any additional tax amounts) for sales in the aforementioned cases in their tax returns.
(2) If the sale is made directly to the beneficiary:
2.1 The seller receives the certificate from the beneficiary and any additional tax amounts if the value of the residential unit is higher than 850,000 SAR, and the beneficiary signs a commitment not to submit the certificate to any other financing entity or any other developer, and the seller issues a sales invoice for the full tax value (certificate value + any additional tax amounts).
2.2 The seller submits a refund request via the portal, attaching the title deed after clearance and the sales invoice.
2.3 The developer registers the full tax value (certificate value + any additional tax amounts) for sales in the aforementioned cases in their tax returns.