Saudi Arabia to levy 2.5% tax on undeveloped lands

Saudi Arabia’s cabinet said on Monday that it will gradually levy a 2.5 percent tax on undeveloped lands owned by persons or private entities in urban areas, after the country’s the shura council approved last week a proposal to impose taxes on the so-called white lands.

The collected taxes and fines shall be deposited in the country’s central bank, the Saudi Arabian Monetary Agency, and will be used to develop the country’s infrastructure for new housing projects, the state-owned news agency reported.

Under the new system, the housing ministry will be in charge of issuing executive procedures and rules for the new legislation within 180 days. The law will be effective 180 days after publication in the official gazette.

The draft law was amended to include gradual taxes in accordance with a specific timetable to force landlords to sell land, thus increasing land supply.

Saudi Arabia’s cabinet approved in March a proposal to tax undeveloped landowners to encourage development and curb a shortage in affordable housing.