Saudi cabinet approves regulations for ‘white land’ tax

Saudi Arabia’s cabinet has approved a number of details regarding the controversial ‘white land’ tax to discourage owners of urban land from keeping it empty.

Under the approved regulations owners of empty plots of urban land designated for housing or offices in towns and cities have to pay a tax of 2.5 per cent of the value of the land each year, said the official Saudi Press Agency.

The taxes will apply to urban undeveloped land plots of 10,000 square metres or more in ‘certified master planned’ developments, though no list of these has been announced.

Following this, single land owners of smaller plots of developed land (exceeding 5,000 sq m) in the certified master planned developments will be subject to the tax.

At the final stage single land owners of plots exceeding 10,000 sq m in one city will be subject to the tax.

Owners who avoid the tax will be subject to fines by the Ministry of Housing.

Officials are introducing the tax as part of a series of measures to tackle the country’s acute shortage of affordable housing to accommodate its rapidly growing population.

Last week the  government published details of the housing element of its National Transformation Plan, a blueprint  aimed at reducing the country’s reliance on crude revenue following the oil price crash.

The plan proposes to increase the annual growth rate in the property sector from about 4 per cent now to 7 per cent in four years’ time, and to reduce the cost of housing from what averages out as about 10 times gross salaries to five times.

It is hope these changes will encourage land owners to ring forward plans and begin development in order to avoid the additional tax burden of holding undeveloped land

It is thought others will seek to sell sites to other developers and potentially reduce land values, which have been soaring over the last few years amounting to 30 per cent – 50 per cent of the cost of developing