Saudi to put annual tax on undeveloped lands

Saudi Arabia said on Sunday it would impose an annual tax on undeveloped lands, following legislation that was drafted around six months ago.

The housing ministry said on its Twitter account the tax would be equivalent to 2.5 percent of the value of the land held by individuals or non-government entities.

For years, owners of undeveloped land in urban areas opted to keep it vacant while waiting for land values to rise, or to use the plots for speculative trading, the Wall Street Journal reported in February.

This in turn has caused a lack of affordable housing in the kingdom’s largest cities.

The tax also helps top up state coffers hit by collapsing oil prices. Saudi is currently seeking to wean its economy off energy revenues, and last month announced sweeping plans to boost non-oil sectors and sell off a stake in state-owned oil giant Saudi Aramco to help create a sovereign wealth fund.

The tax on unused land was mulled in March last year. Experts told the local Saudi Gazette in November that a levy on unused land parcels around large cities could earn the government up to $13 billion.

(With Reuters)