Saudi Focus

Tax plan on undeveloped land

October 2015

Saudi authorities are considering imposing tax on undeveloped urban land across the board, even on small plots, to prevent landowners from evading the levy, the Okaz newspaper reported.

In March, the cabinet approved in principle the idea of taxing undeveloped land in urban areas, in order to press wealthy owners into developing their plots or putting them on the market instead of hoarding them. It was the first major economic policy initiative announced by the government since King Salman took the throne in January, and could help to end a shortage of affordable homes in Saudi Arabia while spurring economic growth.

Quoting unnamed sources familiar with the debate within the government, Okaz said authorities were leaning towards imposing the tax even on small plots, to prevent owners from avoiding the levy by splitting up their holdings.

The only exception would be for owners of small plots who could prove they had asked for a loan from the housing ministry or the government’s real estate development fund to construct a residential building on their land, the newspaper added.

In a sign that some landowners were already reacting to the expected imposition of the tax, some very large plots with areas exceeding 1 million sq m have recently been offered for sale at prices lower than year-ago levels, Okaz said.

It did not say when the tax might be imposed or at what rate, or specify the size of plots that would be considered small.

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