When must a landlord register for VAT in Saudi Arabia?
Short answer
A landlord resident in Saudi Arabia must register for VAT once its taxable supplies, such as commercial rent, exceed SAR 375,000 over the past 12 months or are expected to exceed it over the next 12 months, and must apply within 30 days of the end of the month in which this becomes clear. Residential rent is an exempt supply and does not count, so a landlord who only lets homes does not have to register. Voluntary registration is possible once supplies or expenses reach SAR 187,500.
What counts towards the SAR 375,000 threshold?
Article 52 of the GCC Unified VAT Agreement leaves exempt supplies out of annual supplies. An unregistered landlord, individual or company, runs the test at the end of every month on the 12 months just ended and on the expected next 12 months (Articles 3 and 4 of the VAT Implementing Regulations), since the Agreement treats regular use of property as an economic activity.
- Counts: rent from shops, offices and other non-residential property and land, and from hotels, serviced apartments and any building designed for temporary stays.
- Does not count: letting homes as permanent residences, and sales of real estate, which have been VAT-exempt since 4 October 2020 and are subject to the Real Estate Transaction Tax instead.
- ZATCA may require related persons carrying on similar or connected activities to add their supplies together and treat the total as each one’s annual supplies (Article 9 of the Regulations).
What does a registered landlord have to do?
A registered landlord’s main obligations:
- Charge 15% on the rent of non-residential units and issue a tax invoice for each rent charge; rent from homes stays exempt.
- File a return every quarter, or every month if taxable supplies exceed SAR 40 million a year, and pay by the last day of the month after the period ends (Articles 58, 59 and 62 of the Regulations).
- Issue invoices electronically (phase one since 4 December 2021), then connect to ZATCA’s Fatoora platform when notified of its wave. Wave 25, announced on 24 July 2026, covers registered taxpayers whose VAT-able revenue exceeded SAR 187,500 in any year from 2022 to 2025, with integration starting on 1 February 2027.
What an unregistered landlord may not do, and the penalty for late registration
A person who is not registered may not collect VAT from a tenant, and issuing a tax invoice while unregistered is punishable by a fine of up to SAR 100,000 (Article 44 of the VAT Law).
Failing to apply for registration on time carries a fine of SAR 10,000 (Article 41 of the Law), and ZATCA may register the person without an application, with effect from the dates set in Articles 3 and 4 of the Regulations (Article 6).
Follow-up questions
Does residential rent count towards the registration threshold?
No. Leasing a home is exempt under Article 30 of the Regulations, and ZATCA’s real estate guideline says a lessor of homes cannot register for VAT on account of those supplies or deduct VAT on the related costs.
When can a landlord register voluntarily?
When a resident’s supplies or expenses reach SAR 187,500 over the previous 12 months or are expected to over the next 12 (Article 7 of the Regulations). The landlord then charges VAT on taxable rent and deducts the related input VAT, and may not apply to deregister within 12 months unless the activity stops.
Can a landlord deregister if commercial rent falls?
Yes, on application, if supplies did not exceed SAR 375,000 in the previous 12 months and are not expected to in the next 12. Deregistration is mandatory within 30 days if the activity stops or the lower-turnover conditions in Article 13 of the Regulations are all met.
Official sources
- GCC Unified VAT Agreement, Articles 50–52 — Zakat, Tax and Customs Authority (ZATCA)
- VAT Implementing Regulations, Articles 3, 4, 6, 7, 9, 13, 30, 58, 59 and 62 — ZATCA
- VAT Law, Articles 41 and 44 — ZATCA
- VAT guideline for real estate investment and real estate financing (August 2021) — ZATCA
- Wave 25 of e-invoicing integration (decision 1448-99-238) — Umm Al-Qura official gazette
General information for guidance, not legal advice; the governing regulations and official bodies are the final reference.
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