2.5% tax on unused urban land

Custodian of the Two Holy Mosques King Salman chairs the Cabinet's session at Al-Yamama Palace in Riyadh on Monday afternoon. — SPA

Custodian of the Two Holy Mosques King Salman chairs the Cabinet’s session at Al-Yamama Palace in Riyadh on Monday afternoon. — SPA


In a landmark decision to address the growing housing shortage and to make homes more affordable, the Council of Ministers on Monday approved a law to impose tax on undeveloped plots of land in urban areas.

The weekly session of the Cabinet, chaired by Custodian of the Two Holy Mosques King Salman at Al-Yamama Palace here, endorsed the law, which stipulates that 2.5 percent of the value of land has to be levied as tax annually.

The decision will be implemented after six months.

Those who violate the law will be fined.

Revenues from the tax and fines will be used for housing projects as well as for implementing infrastructure facilities and services at these projects, the Saudi Press Agency reported.

Revenues will be deposited in an account at Saudi Arabian Monetary Agency (SAMA).

The money charged will be extracted from the value of the land after evaluation.

Last week, the Shoura Council endorsed the draft tax on undeveloped land.

In a statement to SPA, Minister of Culture and Information Adel Al-Turaifi said the executive bylaw of the land tax regulation details the criteria to estimate the value of a property, the time-bound program to levy tax in a phased manner, and the required regulations to ensure fair implementation of the tax system in a way preventing tax evasion.

The Cabinet has instructed the Ministry of Housing to prepare the executive bylaw in coordination with the concerned agencies.

The Shoura Council passed the draft law on Nov. 17 in line with the directive of the Cabinet on Oct. 19 to complete the studies about the proposal to impose tax on unused plots of land within 30 days. Earlier on March 23, the Cabinet gave the go ahead to impose tax on undeveloped plots of land in urban areas to tackle housing shortage for its young and growing population.

The Cabinet had instructed the Council of Economic and Development Affairs (CEDA), chaired by Deputy Crown Prince Muhammad Bin Salman, second deputy premier and minister of defense, to prepare the required regulations in this regard. Accordingly, the tax proposal was prepared under the supervision of CEDA to bring down the cost of land for building housing units for the low and limited income people.


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