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Housing

In Saudi Arabia, a Rare Tax on Wealthy Landowners

Saudi Arabia’s affordable housing crisis has spurred the kingdom to tax landowners sitting on undeveloped property.
Saudi women walk in Riyadh's Shmeisy neighborhood.
Saudi women walk in Riyadh's Shmeisy neighborhood.Reuters / Faisal Al Nasser

Saudi Arabia’s citizens enjoy an almost tax-free existence. The kingdom imposes no income tax or tax on basic goods—and this will continue, despite a 15-year plan announced in April 2016 that aims to stimulate the economy and cease the country’s dependence on oil revenue.

But the government has now decided to tax one segment of the population—owners of undeveloped land in urban areas. In cities like Riyadh and Jeddah, huge lots often owned by wealthy Saudis sit empty, with the owners waiting for property values to rise or using the land for speculative trading. “Land has been seen as a wealth-storage option,” Steffen Hertog, a professor of Gulf politics at the London School of Economics, tells CityLab. “This is due to the continuing appreciation of land values.”