IslamicFinance.de

Saudi Arabia has approved proposals for a 2.5% ‘white land tax’, which will apply to undeveloped residential and residential/commercial plots within urban boundaries. The law will come into force six months after the Ministry of Housing’s release of detailed regulations, the publication of which will take place within the next six months. Once implemented, proceeds from the tax will be deposited into an account of the Saudi Arabian Monetary Agency, and will be used to fund housing and related infrastructure projects in the Kingdom. The law is intended to stimulate further development to meet the demand for middle-income housing in Saudi Arabia. JLL predicts that some land owners will bring forward plans and begin development in order to avoid the additional tax burden of holding undeveloped land. Others, it suggests, will seek to sell sites to other developers, which should help to reduce land values.