Saudi Arabia to Levy Tax on Empty Land
May 9, 2016 Taxation in Saudi Arabia
RIYADH – Saudi Arabia hopes that its new tax will help ensure that more than half of all people in the country will own their own home by the end of 2020.
In an effort to help more families in Saudi Arabia own and live in their own home, the government has approved a new tax on undeveloped land, according to a statement made on May 8th by the Ministry of Housing of Saudi Arabia.
The new annual tax will be levied at 2.5 percent of the value of the land for as long as the land remains undeveloped.
The government hopes that the new tax will encourage builders and developers to stop simply holding land, and, instead, begin building more residential housing.
It is currently estimated that nearly half of all land in the major cities of Saudi Arabia is currently empty, and is regularly traded as a piece of speculative investment.
The tax make come into effect as early as June this year, although some transitional periods may apply to lands that are not yet developed but are already slated for construction.
The revenues from the tax are expected to be used to pay for infrastructure development projects.
The new tax is not the only measure being taken by the government of Saudi Arabia to address housing affordability, with a new scheme being recently announced to grant government backed mortgages to as many as 100 thousand low incomes families.
The government hopes that the rate of home-ownership in Saudi Arabia can be increased to 52 percent, from the current level of 47 percent, by the year 2020.
Photo By: Efren Rodriguez