In an issuance ordering exemption of VAT from property deals, Saudi Arabia has imposed a 5% tax on real estate transactions on Friday.
The world’s largest oil exporter went into a recession, with the economy shrinking by 7% in Q2, being hit by the Covid-19 pandemic. The VAT was tripled to 15% by the Saudi government to encourage non-oil revenues.
The decision aims at boosting the real estate market, increase property sales, and spur economic growth in the kingdom.
In a tweet by Saudi Finance Minister, Mohammed Al Jadaan mentioned that the loyal decree will aim at supporting citizens and ease their burdens, enabling them to have their homes.
According to the Saudi Press Agency, the government will be bearing the cost of the new Real Estate Transaction Tax for the citizens who’ll be buying their first homes, provided that the amount does not surpass 1 million riyals.
In a JLL report, the average cost of residential properties in Riyadh met a 3.5% increase, as compared to 2019. Notably, the rates dropped down by 1%.