Saudi Arabia Expands White Land Tax to Vacant Properties: What Landowners and Investors Need to Know in 2025
Saudi Arabia Focus
Shiraz KhanPartner,Head of Taxation
Osama TerkawiTax Executive,Tax
Reforms broaden the White Land Tax to undeveloped and long-vacant properties, increasing rates and compliance obligations, reshaping property ownership economics
As Saudi Arabia broadens the scope of its White Land Tax in 2025, property owners and investors face new obligations that will need to be considered. This article examines the evolution of the regime, the latest reforms, and what they mean for landowners, developers, and investors navigating the Kingdom’s urban property market.
Saudi Arabia’s White Land Tax (“WLT”) Regulations, issued by the Ministry of Municipalities and Housing (“MoMaH”), have been in place since 2016. The WLT was designed as a policy tool to promote more efficient land use in priority cities. It applies to both natural and legal persons who own qualifying plots of land within urban boundaries designated by MoMaH.
When introduced, the WLT imposed an annual levy of 2.5 percent on the market value of undeveloped residential land located within designated urban areas. The policy objectives were clear: to encourage land development, to address concentrated land ownership that restricted supply, and to support the availability and affordability of housing in key urban centres.
For landowners, this changes the economics of property holding in Saudi Arabia. Retaining land or buildings without development or occupation is no longer cost-neutral; it now creates an annual tax liability.
In practice, the early years of the regime had limited impact. Enforcement challenges and the flat 2.5 percent rate meant that many large parcels of undeveloped land remained underutilised. Policymakers responded by strengthening the framework.
In 2024, the WLT was amended to introduce an enhanced tax rate of up to 10 percent in specific cases of non-compliance. This higher rate applied where landowners failed to register qualifying land within the required timelines, did not commence development within MoMaH’s prescribed periods, or otherwise failed to meet regulatory conditions.
The reform also clarified the scope of application, with phased implementation according to land size and aggregation:
Stage 1: undeveloped land of 10,000 square metres or more within an approved zone;
Stage 2: developed land, or multiple developed plots owned by the same person, totalling 10,000 square metres or more within a single approved plan;
Stage 3: developed land of 5,000 square metres or more, or multiple plots within the same city held by a single owner totalling 10,000 square metres or more.
Exemptions applied for land under active development (meeting MoMaH’s conditions), land subject to ownership disputes supported by legal documentation, land with natural constraints such as topography or access restrictions, and land included in government development projects or benefiting from strategic exemptions.
Landowners were required to register eligible properties within six months of the official announcement for each city and phase. Failure to register, to submit the required documentation, or to pay the assessed tax could result in the 10 percent rate being applied, together with additional administrative fines. These fines are cumulative and may reach an amount equal to the unpaid tax liability, in addition to the tax itself.
On 29 April 2025, the Saudi Cabinet approved significant amendments to the White Land Levy Law, marking the most substantial changes since the regime’s introduction in 2016. The amendments were published in the Official Gazette on 12 May 2025 under Royal Decree No. M/244. To reflect the expanded scope, the law has been renamed “White Land and Vacant Properties.” The MoMaH) issued the implementing regulations for undeveloped land on 10 July 2025, with separate regulations for vacant properties to follow within one year, by May 2026.
The key change is the extension of the levy to long-vacant developed properties, meaning residential or commercial buildings within designated urban areas that remain unoccupied without valid justification. These properties will be subject to an annual levy of up to 5 percent of their equivalent rental value, as determined under MoMaH’s forthcoming valuation rules, with self-declared values not being accepted. The Council of Ministers has the power to approve an increase in the vacant property levy to up to 10 percent.
For undeveloped land, the annual levy, previously a flat 2.5 percent, may now be set up to 10 percent of market value based on criteria in the regulations. While the standard rate is expected to remain 2.5 percent in most cases, higher rates may be applied for prolonged vacancy, speculative pricing, or policy reasons, and lower rates may be granted for hardship or other exemptions.
The minimum size threshold for application is 5,000 square metres, including multiple parcels under common ownership. Only land within minister-designated urban zones that meets the service readiness test, meaning it has basic infrastructure such as roads, water, electricity, and sewage, is taxable.
Exemptions apply for land under active development that meets MoMaH’s conditions and is supported by evidence, land in legal disputes or subject to ownership claims, land with natural constraints that prevent development, and land included in government projects or benefiting from strategic exemptions.
Failure to register eligible land or vacant properties within the prescribed timelines, to provide required documentation, or to pay the levy can result in the maximum rate being applied and administrative fines of up to the amount of the unpaid tax, in addition to the tax itself.
The amendments were published in the Official Gazette on 12 May 2025. Regulations for undeveloped land are expected within 90 days, while detailed rules for vacant properties will follow within one year (by May 2026).
Further guidance from MoMaH will be required on several points, including:
the precise definition of “vacant” property;
valuation methodologies for both land and rental value; and
how exemptions will apply to built properties (e.g. under renovation).
Looking ahead, investors and landowners should monitor MoMaH announcements closely, as the forthcoming regulations will be critical to compliance planning.
The potential impact of these reforms is substantial. An undeveloped plot valued at SAR 50 million could now attract an annual WLT liability of up to SAR 5 million. A vacant commercial building with an estimated rental value of SAR 10 million may face a levy of between SAR 500,000 and SAR 1 million if left unoccupied.
For landowners, this changes the economics of property holding in Saudi Arabia. Retaining land or buildings without development or occupation is no longer cost-neutral; it now creates an annual tax liability. Owners must therefore plan actively — whether by commencing development, leasing vacant space, or disposing of surplus holdings — in order to manage exposure to the WLT.
From a compliance perspective, the obligations have become more rigorous. Registration and reporting must be completed within specified timelines, and failures can result in the higher rate being applied, along with administrative fines. For institutional investors, REITs, and developers, WLT liabilities will now need to be built directly into financial models, investment appraisals, and compliance strategies.
The expansion of the White Land Tax reflects the Kingdom’s broader Vision 2030 objectives. Housing supply, urban regeneration, and efficient land use remain central policy priorities. By extending the levy to vacant built properties, the government has reinforced its intention that all land and property within designated urban boundaries should contribute to these national goals.
Importantly, the legislative trajectory illustrates a clear progression. The 2024 reform focused primarily on compliance, ensuring that landowners registered and advanced development. The 2025 amendments go further, addressing economic inactivity more broadly by bringing both undeveloped land and vacant constructed assets into scope.
The White Land Tax has evolved from a narrow levy on undeveloped plots into a comprehensive framework governing underutilised urban land and property in Saudi Arabia. The 2025 reforms, particularly the inclusion of vacant buildings, represent a decisive policy development.
For landowners and investors, the implications are clear: passive ownership is no longer cost-neutral. Both undeveloped plots and vacant built properties now fall within scope, the applicable rates are higher, and compliance requirements are more detailed. Those who engage early, meet their obligations diligently, and align their portfolios with the regulatory framework will be best placed to navigate this new environment.
For further information,please contact Shiraz Khan and Osama Terkawi.
Published in September 2025
