Saudi Arabia: SAMA Issues Rules for Opening Electronic Wallets

The Saudi Central Bank (SAMA) has issued the final version of “E-Wallet Rules” as part of its supervisory and regulatory role over Electronic Money Institutions (EMIs).

The rules included provisions and obligations related to opening electronic wallets, verification of clients’ identities, and considerations for classifying and managing inactive wallets.

The rules set the relevant regulatory requirements that licensed EMIs must comply with to protect market participants and support EMIs in providing services that increase the sector’s safety and stability.

The SAMA’s decision reflects its continuous efforts to develop the financial sector and empower EMIs.

SAMA had already published the E-Wallet Rules, seeking comments and feedback from the public and experts, to achieve transparency and public participation.

The comments and feedback were studied and taken into consideration in the final version of the rules.

More details of the rules can be had from SAMA’s website at: https://www.sama.gov.sa/en-us/rulesinstructions/pages/regulation.aspx.

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Saudi Arabia: Royal Commission Lifts Restrictions on Land Transactions

The Royal Commission for Riyadh City has lifted restrictions on the sale, purchase, subdivision, and fragmentation of large tracts of land in the northern part of Riyadh, specifically around the New Murabba Project.

The commission has said the area where the restrictions have been lifted is bordered by King Fahd Road to the west, Prince Faisal bin Bandar Road to the east, the Special Security Forces Road to the south and the pipeline protection area to the north, encompassing approximately 46 million square metres.

The commission stated that it will begin issuing building permits and approving new plans for these plots according to a new urban code that will be announced within three months of this decision.

In a related development, it was announced that 4.71 million square metres of land located within the New Murabba Project development area have had their restrictions lifted.

The National Programme for Community Development in Regions recently urged property owners to provide necessary documentation to establish land ownership, allowing for the initiation of expropriation procedures for properties within the New Murabba Project’s boundaries.

Additionally, the New Murabba Company will prepare design guidelines for the urban code in these areas, which will be disclosed later through the commission’s official channels upon approval.

The commission has emphasised that these steps, including the lifting of restrictions on several parcels of land, are part of a series of forthcoming initiatives aimed at creating a distinguished urban model in Riyadh.

This model will contribute to shaping the city’s future and restructuring its landscape in alignment with the demands of each developmental phase.

The previous restrictions were imposed to assess optimal development methods and ensure the sustainability of these locations and residential communities, facilitating accessibility and service delivery.

Moreover, the commission has noted that the future vision for Riyadh will be shaped by a range of factors, with high-quality projects being the cornerstone of its developmental plans.

These projects will ensure a strategic advancement, positioning Riyadh as a leader on the global stage.

Additionally, the commission has established a centralised contact centre to address public inquiries regarding the mentioned lands.

The centre can be reached at 8001240800 and operates from Sunday to Thursday, between 8 a.m. and 8 p.m.

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Saudi Arabia: Real Estate Transactions Tax

Al Watan, 3 November 2024: A workshop titled “Real Estate Transactions Tax” organised by the Real Estate Committee at the Ahsa Chamber of Commerce, in cooperation with the Zakat, Tax and Customs Authority, has determined that it would take 5 minutes on average to register a property on the electronic Real Estate Transactions Tax platform.

The platform aims to facilitate the process for users, enabling them to register their properties for taxation, pay the applicable tax on non-exempt cases, and complete this essential step before finalising the property transfer or contract documentation.

The platform’s services include tracking application status, viewing invoices, and modifying or canceling applications.

The workshop has emphasised the importance of considering the fair market value, which is the amount due for the property (in exchange for similar and concurrent goods or services provided flexibly between unrelated parties).

The Real Estate Transactions Tax is an indirect tax on all transactions that result in a legal effect, involving the transfer of property ownership or possession for the purpose of ownership or usufruct from one person to another.

The transaction may be contingent on a subsequent action by the parties involved, such as a sale, or based on the unilateral will of the transferor, such as a bequest.

It includes gifts, exchanges, barters, financial leases, Islamic leases ending in ownership transfer, transfer of shares in real estate companies, and long-term usufruct contracts exceeding 50 years.

The tax applies only once in cases where the parties, property, and value remain the same.

The Real Estate Transactions Tax exempts certain transactions, such as those involving inheritance division, transfers without consideration to family members or charitable associations, and forced transfers due to expropriation for public benefit.

Other exempted transactions include documented gifts to spouses or third-degree relatives (under specific conditions), transfers based on a legal will, temporary transfers as security for financing or credit (unless permanently transferred), transactions before the regulations’ effective date related to lease-to-own or financial leases, temporary transfers between a fund and a custodian, and contributions of property as in-kind shares in a company established in the Kingdom.

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Saudi Arabia: SAMA Seeks Public Input on Updated Debt Collection Rules for Individuals

Argaam, 27 October 2024: The Saudi Central Bank (SAMA) is seeking public feedback on the draft of Debt Collection Regulations and Procedures for Individual Customers through the public consultation platform “Istitlaa”.

SAMA has stated that this project seeks to enhance and standardise debt collection practices, ensuring clear communication and safeguarding the rights of all parties.

The project sets minimum standards for financing institutions to follow in debt collection, including initial contact with clients, instalment deductions, managing clients at risk of default, and handling existing defaults.

It also emphasises due diligence in collecting overdue debts and addresses debt relief provisions in cases of death or total disability.

Feedback and comments on the Debt Collection Regulations and Procedures for Individual Customers must be submitted within 15 days of this announcement to assess their relevance in finalising the draft.

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Saudi Arabia: Capital Market Authority Seeks Public Opinion

The Capital Market Authority (CMA) has called upon interested parties, stakeholders, and market participants to provide their views on a draft amendment to the Investment Funds Regulations.

The public consultation period will last for 15 calendar days, ending on 03/05/1446H (corresponding to 05/11/2024).

The proposed amendment aims to develop the regulations governing the offering of private and foreign investment funds to retail clients, in an effort to enhance investor protection.

The draft includes a provision that prohibits the offering of units in a private fund to retail clients unless the fund manager collects cash subscriptions from qualified and institutional clients equal to or exceeding the total cash subscriptions intended to be collected from retail clients.

Additionally, the amendment proposes a provision that prohibits the private offering of securities issued by a foreign fund to retail clients unless the fund manager collects cash subscriptions from qualified and institutional clients in the Kingdom equal to or exceeding the total cash subscriptions intended to be collected from retail clients.

In 2021, the CMA allowed retail clients to subscribe to private and foreign funds without specifying their subscription ratio compared to qualified and institutional clients, subject to a maximum subscription of SAR 200,000 (or equivalent) per retail client.

The current proposed amendment aims to set a ratio for retail clients’ cash subscriptions in these funds to enhance their protection and mitigate risks, as private and foreign funds have fewer regulatory requirements compared to public funds.

The CMA has stated that all comments and feedback received from interested parties and stakeholders will be carefully considered and studied before finalising the amendment.

Comments can be submitted through the Unified Electronic Platform for Public and Government Entities Consultation (Istitlaa) at istitlaa.ncc.gov.sa or via email to Laws.Regulations@cma.org.sa.

The draft amendment is available for review at the provided electronic link.

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Saudi Arabia: Insurance Unveils Details of New Retirement System

Ean Libya, 14 October 2024: The Saudi General Organisation for Social Insurance announced the details of the new retirement system and the minimum age for early retirement.

The organisation has stated that the minimum age for early retirement for subscribers to the new system is 55 years old.

The organisation has announced that one of the conditions for obtaining a retirement pension is having 30 years of service for the retiree, with their cessation of work subject to the provisions of the system when they wish to receive the retirement pension.

It has been explained that the retirement age in the new system is 65 years old, but retirement can be taken ten years before this age.

It has been pointed out that the minimum retirement pension will be 4,000 riyals for those whose subscription period is 40 years.

If the subscription period is less than that, this minimum will be reduced for each 12 months of subscription and each month proportionately, provided that it does not fall below 2,000 riyals.

Regarding the mechanism for calculating the retirement pension, the Saudi General Organisation for Social Insurance has explained that the average wage or salary will be calculated based on the highest wages or salaries subject to subscription for 180 months of the subscription periods in the new system.

Then, the average wage is multiplied by 2.25%, and the result is multiplied by the number of subscription months, then divided by twelve.

In the case of early retirement, the subscriber will be deducted 3% for each year that their subscription period falls short of 40 years.

The Saudi General Organisation for Social Insurance has also pointed out an increase in the subscription deduction rate by 0.5% for each year during the next four years, raising the deduction rate from the employee’s salary from 9% to 11%, in addition to a ‘sand’ deduction of 0.75%, bringing the total deduction from the employee’s salary to 11.75% monthly.

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Saudi Arabia: Labour Dispute Resolution Decree Extended

Sada, 8 October 2024: The Saudi government has decided to prolong the implementation of the decree on amicable settlement of labour disputes for an additional year.

This legal measure aims to facilitate the resolution of employment-related conflicts through conciliation before escalating to court proceedings.

The Council of Ministers’ decision extends the application of the relevant provision in the Royal Decree, which mandates that labour disputes must first be submitted to the labour office for attempted amicable settlement prior to filing a case with the labour court.

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