Final rules due on Saudi Arabia’s undeveloped land tax

Saudi Arabia is to announce the final regulations on its controversial ’empty land tax’ in two weeks, the housing minister said on Wednesday.

The regulations will detail the law’s planned implementation of the 2.5 per cent annual tax on undeveloped urban land, known locally as white land.

It estimated that 40 to 50 per cent of the land inside major cities remains vacant, much of it owned by wealthy individuals or companies that have tended to hold or trade it for speculative profits rather than developing it for housing.

“The land fees are almost completed now, all of the elements were studied by all of the relevant agencies,” Majed Al Hogail said at a press conference in Jeddah, where officials are presenting a plan to overhaul the nation’s economy by 2020. “Now it is ready, I expect during the coming two weeks it will be announced in a final way.”

First unveiled by the cabinet in November, the tax is designed to tackle a severe housing shortage which the government estimates at around 1.5 million homes over the next seven years. Many young families are unable to own their homes due to a lack of lending and construction that falls far short of the growing population’s needs.

Home development in the kingdom has also suffered due to  landowners’ inclination to speculate on rising land values.

Since taking power in 2015, the government under King Salman has been working to clear the house-building roadblocks and turn the kingdom into a thriving desert hub to match neighbouring Dubai.

The new levy will likely be applied in five stages, starting with plots larger than 500,000 square metres at first. It will eventually include plots as small as 10,000 square meters, Al-Riyadh newspaper reported in May, citing a draft it has seen.

The newspaper said landowners will have 6 months to get their documents in order.