Saudi Arabia defines the zones for implementing the White Land Tax in Riyadh

The Ministry of Municipal, Rural Affairs and Housing has announced the approval of geographical zones for the implementation of the White Land Tax system in Riyadh city, as part of its plans to regulate the real estate market and increase housing supply.

Fee Tiers and Details

According to the Ministry, the geographical zones have been divided into five main tiers, with varying fees imposed on each:

• 10% on the highest priority tier.
• 7.5% on the high priority tier.
• 5% on the medium priority tier.
• 2.5% on the low priority tier.

Lands outside the priority zones are exempt from fees, but are counted within the total white lands owned by the taxpayer within Riyadh city limits.

The Ministry confirmed that the executive regulations of the White Land Tax system include an annual review of each geographical zone. This review includes assessing real estate supply, monitoring price levels, detecting any monopolistic practices, and based on these results, fees may be maintained, modified, or suspended to achieve the program's objectives.

The Ministry called on all landowners to register their lands through the designated online portal within a period not exceeding 60 days from the date of announcement, to avoid penalties that may reach up to 100% of the fee value. It also indicated that landowners can benefit from the services of the "Itmam" Center, which facilitates the approval of plans and issuance of licenses supporting urban development processes.

The Ministry clarified that White Land Tax revenues will be entirely allocated to fund housing projects and increase housing supply, which contributes to achieving the objectives of the housing program and increasing home ownership rates among citizens.

The Decision's Impact on the Saudi Real Estate Market

Real estate specialists believe that the implementation of fees will change the nature of real estate investment in Riyadh. After some investors used to hold land plots without development waiting for price appreciation, they now must either develop them or sell them to avoid paying fees.

Market experts indicate that this step will limit monopolistic practices that unjustifiably raised prices in some areas, and will instead promote actual investment in urban development, which will reflect on revitalizing construction activity and serve the national economy.

Economists confirm that the real estate development sector is a main driver for approximately 90 other economic sectors, and therefore, the activation of the White Land Tax system will work to improve economic growth, achieve sustainability in the Saudi real estate market, and direct investments towards more feasible projects.

Frequently Asked Questions

What is the purpose of implementing the White Land Tax?

The goal is to stimulate the development of unused lands within cities and increase housing supply in line with population growth and market needs.

Can White Land Tax fees be paid in installments?

According to the Ministry of Housing, taxpayers can pay the fees either in one lump sum or in scheduled installments through the online platform, to alleviate financial burdens and facilitate compliance.

How can landowners benefit from developing the land instead of paying fees?

When starting to develop the land or actually investing it in residential or commercial projects, the property becomes exempt from fees, which encourages owners to engage in developmental projects instead of freezing assets.