Saudi Arabia has given new impetus to real estate activities in the country by exempting real estate transactions from a 15% value-added tax and instead imposing a new 5% tax on property deals.
These decisions came in accordance with a royal order issued by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz on Friday, in a move aimed at protecting the growth in the real estate sector and revitalizing the economy.
In remarks, Saudi Finance Minister Mohammed Al-Jadaan said that this move was intended to help stimulate economic growth and provide support to Saudi citizens.
Supporting the real estate and residential sector is an important part of Saudi Vision 2030, Al-Jadaan said. It contributes significantly to the development of the country’s economy by strengthening the partnership with the private sector, real estate developers, and finance companies, he added.
The minister explained that the royal order was aimed to “support citizens, ease their burden and enable them to own homes, and helps develop the Kingdom’s economy by spurring the residential and commercial property sector.”
For his part, Minister of Housing Majid al-Hogail said the move would help achieve a target of boosting housing ownership by Saudis to 70 percent by 2030.
The royal order said the government would bear the cost of the new Real Estate Transaction Tax “for up to 1 million riyals” for Saudi citizens purchasing their first home.
Real estate developer and head of the Real Estate and Urban Development Committee in the Eastern Province Chamber in Saudi Arabia, Hamid bin Hamri, underlined the importance of this step in supporting the economy and the real estate market, noting that the government was seeking to regulate one of the largest streams of the economy, which is the real estate sector.
In remarks to Asharq Al-Awsat, he said: “The decision contributes to regulating real estate developers. Individual developers, who represent a large proportion of the market, will work to transform into companies with a legal framework to benefit from the decision, which would boost professionalism in the real estate development sector in Saudi Arabia.”
Hossam Al-Saad, CEO of a major real estate marketing company, said that the decision came to maintain the pace of development in the housing and real estate sector.
He added that Saudi Arabia was moving towards a clear target to achieve housing ownership to 70 percent by 2030.
