taxnews.ey.comPrint

24 June 2025

Saudi Arabia approves amendment to Executive Regulations for Zakat Collection on real estate and off-plan projects

  • Saudi Arabia issued Ministerial Resolution No. 1248 on 13 June 2025, announcing an approved amendment to Article 73 of the Executive Regulations for the Collection of Zakat (Bylaws) on real estate projects under construction and off-plan sales projects, issued earlier as a draft for public consultation.
  • The amendment clarifies zakat obligations for developers, encouraging better compliance and reducing ambiguity in the assessment process.
  • Taxpayers involved in real estate should review the amendment to align their zakat calculations and reporting practices accordingly.
 

Executive summary

Published in the Official Gazette on 13 June 2025, Ministerial Resolution (MR) No. 1248, dated 10/11/1446 AH , approves the amendment of Article 73 of the Executive Regulations for the Collection of Zakat (Bylaws), relating to real estate projects under construction and off-plan sales projects.

This amendment clarifies the zakat obligations for off-plan sales real estate projects.

Detailed discussion

Background

On 15 January 2024, Saudi Arabia's Zakat, Tax and Customs Authority (ZATCA) announced proposed amendments to Article 73 of the Bylaws relating to real estate projects under construction.

The ZATCA had proposed to add a new paragraph to Article 73, addressing the zakat treatment of off-plan real estate projects for sale. (See EY Global Tax Alert, Saudi Arabia proposes amendments to Zakat Executive Regulations for real estate projects under construction , dated 16 January 2025).

Highlights of the approved amendment

The approved amendment to Article 73 introduces clearer guidelines on the zakat treatment of off-plan real estate sale projects, as follows.

Deduction method for off-plan sales projects: Off-plan sales projects licensed by the relevant authority can be deducted from the zakat base using the formula below, allowing for a more accurate calculation of zakat obligations when the result is greater than zero.

Deductible amount = Project balance at year-end - value of additions during the year.

Project-specific application: The calculation must be done for each project individually. If a project's balance includes both current and noncurrent assets, deductions will first be taken from the noncurrent assets.

Implementation: The amendment applies to fiscal years starting on 1 January 2025 and beyond, with provisions for taxpayers to request its application to prior fiscal years.

Implications

Real estate businesses should review the amendment and assess their zakat obligations relating to off-plan sales projects.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young Professional Services (Professional LLC), Riyadh

Ernst & Young Professional Services (Professional LLC), Jeddah

Ernst & Young Professional Services (Professional LLC), Al Khobar

Ernst & Young LLP (United States), Middle East Tax Desk, New York

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2025-1338

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2025, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement