Custodian of the Two Holy Mosques King Salman issued a royal order early Friday relating to the real estate sector in the Kingdom.
The order exempts real estate deals from a 15 percent value-added tax (VAT) and imposed a new 5 percent tax on transactions, the Saudi Press Agency reported.
Commenting on the move, Saudi Arabia’s Finance Minister Mohammed Al-Jadaan tweeted, saying: “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.
Al-Jadaan added that the order also aimed to support Saudi citizens who want to buy homes.
The royal order said the government would bear the cost of the new Real Estate Transaction Tax “for up to SR1 million (nearly $267,000)” for Saudi citizens purchasing their first home.
The modalities will be decided by the finance minister, the chairman of the Board of Directors of the General Authority of Zakat and Tax, the order added.
The housing minister welcomed the decision, saying the move would help achieve a target of boosting housing ownership by Saudis to 70 percent by 2030 in a country with an overwhelmingly young population.