Kingdom’s cabinet approves new land tax rule
01 July 2016
Saudi Arabia’s cabinet has approved a tax on undeveloped urban land and rules allowing foreign investors to own 100 per cent of retail and wholesale businesses, the official Saudi Press Agency (SPA) said.
The 2.5 per cent annual tax on the value of undeveloped land designated for residential or commercial use will be applied in stages to owners of plots exceeding 5,000 sq m, the SPA quoted a cabinet statement as saying.
The measure aims to help resolve a shortage of affordable housing in Saudi Arabia by putting more unused land on the market where it can be acquired by developers.
Undeveloped lands are defined as all vacant lands dedicated to residential use or commercial residential use within the urban boundary limits.
The cabinet also approved rules, originally announced last September, permitting full foreign ownership of retail and wholesale operations. Previously, the country’s ownership ceiling was set at 75 per cent.
The introduction of a land tax marks a big step for the world’s top oil exporting country in addressing a housing shortage. Analysts estimate that 40 to 50 per cent of the land inside major cities remains vacant, much of it is owned by wealthy individuals or companies that have tended to hold or trade it for speculative profits rather than developing it for housing.
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