Saudi imposes new, lower property tax to shore up sector
RIYADH: Saudi Arabia’s king on Friday issued an order exempting real estate deals from a 15 percent value-added tax (VAT) and imposed a new 5 percent tax on transactions as the Gulf state moves to revitalize an economy hit by low oil prices and the COVID-19 pandemic.
RIYADH: View shows the King Abdullah Financial District, north of Riyadh. — Reuters
The finance minister said on Twitter that the order, carried on state media, also aimed to support Saudi citizens who want to buy homes. The world’s largest oil exporter is facing a deep recession, with the economy shrinking by 7 percent in the second quarter and unemployment hitting a record high of 15.4 percent.
De facto ruler Crown Prince Mohammed bin Salman has launched an ambitious plan to diversify the economy and create jobs for millions of Saudis. The government has said it is committed to the plan but that programs would undergo “structural improvements” and be reprioritized to spur growth.
The royal order said the government would bear the cost of the new Real Estate Transaction Tax “for up to 1 million riyals ($266,616)” for Saudi citizens purchasing their first home. The housing minister said the move would help achieve a target of boosting housing ownership by Saudis to 70 percent by 2030 in a country with an overwhelmingly young population.