Saudi Arabia has exempted VAT for real estate transactions which was 15% and sets a new tax at 5% on property deals. The Saudi finance minister tweeted that the Royal Order was announced to help the citizens who wishes to buy homes.
It was in July that the government tripled the VAT to 15% due to high recession and unemployment. The second quarter of the year saw a great shrink in the economy by 7%. The VAT was increased to stabilize the economy.
As per the Royal Order, the government would bear the cost of the new Real Estate Transaction Tax “for up to 1 million riyals” for the Saudi citizens who are purchasing their first home. “The Royal Order aims to support citizens and ease their burden and enable them to own homes, and helps develop the kingdom’s economy by spurring the residential and commercial property sector,” tweeted, Saudi’s finance minister, Mohammed Al Jadaan.
The housing minister was of the opinion that this step will help the government in boosting the housing ownership of the citizens to 70% by 2030, with a country of overwhelming young population.
Saudi Arabia is facing huge economic crisis due to the pandemic and because of the low crude oil prices despite which they provide huge incentives to its people to support them during such situations. Even though the government had to increase the taxes to steady the economy, they are also bringing it down whenever possible.