Saudi Arabia bills 60,000 landowners under new tax rule

• White Land tax penalties kick in
• Building must start on vacant land
• Owners and buyers wrangle over prices

Saudi Arabia has billed more than 60,000 landowners in Riyadh under a new cycle of “White Land” fees, as authorities step up efforts to spur development and ease a housing shortage in the capital.

The 2026 cycle is the first under rules that triple the levy on undeveloped land.

Owners must now pay an annual tax of 10 percent of a property’s value, up from 2.5 percent, according to the Ministry of Municipalities and Housing, cited in the Saudi Gazette.

The tax targets plots larger than 5,000 square metres – about the size of a football pitch – and is a key part of Crown Prince Mohammed bin Salman’s Vision 2030 plan to diversify the economy and expand affordable housing.

Landowners in Riyadh, Saudi Arabia’s largest real estate market, must either pay the fee or begin development within a year, the ministry said. 

Those who fail to comply face penalties of up to double the original amount, though grace periods are available for owners who show serious commitment to development.

Saudi Arabia, the world’s second-largest oil exporter, is seeking to broaden its tax base as oil accounts for about 60 percent of state revenue. 

The kingdom’s 15 percent value-added tax is the highest in the Gulf, compared with 5 percent in the UAE, Oman and Qatar. Kuwait has no VAT.

One contractor told AGBI last year that the higher tax has led to a “Mexican stand-off”, with owners and buyers wrangling over prices.

“I think it will take a while,” Taimur Khan, head of research MENA at property consultants JLL, said. “We’re probably in for a minimum of three months next year for that to really start to show an impact where land prices stabilise.”

• State of the market: Saudi real estate in depth
• Residential sales plummet in Riyadh as prices rise
• Riyadh rent freeze brings relief and uncertainty

The tax invoices come as Saudi Arabia prepares to open the door to large-scale foreign ownership, even as it tries to rein in rising housing prices.

The country will also grant “lifetime” residency to foreigners who purchase a home worth at least 4 million riyals ($1 million), a move already attracting international buyers.

Landowners have 60 days to appeal the new tax invoices, according to the ministry.