바로가기메뉴

본문 바로가기 주메뉴 바로가기

logo

ISSN : 2765-6934

Article Contents

Prev
e-Submission

Vol.12 No.1

Citation Share

Effects of the Real Estate Transaction Tax on Saudi Arabia's Economic Cycles

Asian Journal of Business Environment / Asian Journal of Business Environment, (P)2765-6934; (E)2765-7027
2022, v.12 no.1, pp.25-34
Mohammad Majdi HARIRI (Umm Al-Qura University)
Mohammad, M. H. (2022). Effects of the Real Estate Transaction Tax on Saudi Arabia's Economic Cycles. Asian Journal of Business Environment, 12(1), 25-34.

Abstract

Purpose: The purpose of this paper is to determine the effects of the Real Estate Transactions Tax (RETT) on the economic cycles of Saudi Arabia. A secondary purpose is to determine the effects of RETT on the construction and real estate sectors of Saudi Arabia. Research design, data and methodology: The data used is retrieved from the General Authority of Statistics, Saudi Central Bank and the World Bank Open Data. Econometric models of multiple linear regression with dummy variables have been conducted to achieve the objectives and to quantitatively verify the hypotheses. Results: With the VAT exemption in real estate transactions and its substitution with RETT, a positive effect on the economy and the real estate sector has been observed. However, this tax reform has not produced any significant effects in the construction sector. Conclusions: The main conclusion of the present research is that the real estate market has a major influence on economic cycles. After the tax reform, a reduction in the contribution of taxes on real estate transactions to GDP was detected. For the construction sector, after the tax reform, it is estimated that there will be an insignificant reduction in the contribution of the real estate price index, and of the taxes on real estate transactions, to GDP.

keywords
Real Estate Transaction Tax, RETT, Economic Cycles, Saudi Arabia, Saudi Vision 2030

Reference

1.

Ahmed Aly Abdel‐Mowla, S. (2012). The Egyptian tax system reforms, investment and tax evasion (2004‐2008). Journal of Economic and Administrative Sciences, 28(1), 53–78. https://doi.org/10.1108/10264111211218522

2.

Al-Kibsi, G., Woetzel, J., Isherwood, T ., Khan, J., Mischke, J. & Noura, H. (2015), McKinsey Global Institute, Moving Saudi Arabia's economy beyond oil, , pp. 8-9.

3.

Alkhodre, A., Ali, T., Jan, S., Alsaawy, Y., Khusro, S., & Yasar, M. (2019). A Blockchain-based Value Added Tax (VAT) System:Saudi Arabia as a Use-Case. International Journal of Advanced Computer Science and Applications, 10(5). https://doi.org/10.14569/IJACSA.2019.0100588

4.

Alowais, B. (2020). Effect of Value Added Tax on Stock Prices in Saudi Arabia (Thesis, California State Polytechnic University, Pomona). California State Polytechnic University, Pomona. Retrieved from http://dspace.calstate.edu/handle/10211.3/216622

5.

Alshuwaikhat, H. M., & Mohammed, I. (2017). Sustainability Matters in National Development Visions—Evidence from Saudi Arabia’s Vision for 2030. Sustainability, 9(3), 408. https://doi.org/10.3390/su9030408

6.

Al Faris, A., & Soto, R. (2016). The Economy of Dubai. Oxford University Press.

7.

Ernst and Young Global. (2020), Saudi Arabia introduces real estate transaction tax. Retrieved from https://go.ey.com/2Ju6Oqb (accessed 22 February 2021).

8.

Foster, J. B., & Magdoff, F. (2009). The Great Financial Crisis:Causes and Consequences. NYU Press. Retrieved from https://www.jstor.org/stable/j.ctt1657t2c

9.

Gerçek, A., & Bakar Türegün, F. (2020). Tax System and Tax Reforms in Turkey. In H. Kıral & T. Akdemir (Eds.), Public Financial Management Reforms in Turkey: Progress and Challenges, Volume 1 (pp. 3–17). Singapore: Springer. https://doi.org/10.1007/978-981-15-1914-7_1

10.

Harvey, D. (2012), The urban roots of the financial crisis, Subprime cities: the political economy of mortgage markets, pp. xiii–xix. Wiley-Blackweel, London.

11.

Haque, M. I. (2019). Growth accounting for Saudi Arabia. Asian Economic and Financial Review, 9(6), 691.

12.

Krugman, P. (2010), Back to the economy of the great depression and the crisis of 2008, Ed. Norma, Bogotá.

13.

Prasasti, C. A., Vitadiar, F. Z., Nugroho, I. Y., & Pimada, L. M. (2020). Optimization of Tax Revenue in The Time of Covid-19in Organization of Islamic Cooperation Countries (Case Studies in Egypt, Turkey, Saudi Arabia, and Pakistan). IQTISHODUNA: Jurnal Ekonomi Islam, 9(2), 181–196. https://doi.org/10.36835/iqtishoduna.v9i2.541

14.

Reinhart, C. and Rogoff, K. (2011), This time it is different: eight centuries of financial stupidity, Ed. Economic Culture Fund,. Mexico DF.

15.

Renaud, B. (2012). Real Estate Bubble and Financial Crisis in Dubai: Dynamics and Policy Responses. Journal of Real Estate Literature, 20(1), 51–77. https://doi.org/10.1080/10835547.2012.12090313.

16.

Roubini, N., & Mihm, S. (2010). Crisis Economics: A Crash Course in the Future of Finance. Penguin Press.

17.

SaudiCentralBank (2020) AnnualReport 2010-2020, available at: https://www.sama.gov.sa/en us/economicreports/pages/annualreport.aspx (accessed 22 February 2021).

18.

Selvi, M. S., Pajo, A., Çakir, C., & Demir, E. (2020). Housing sales of real estate developers in Turkey. International Journal of Housing Markets and Analysis, 14(1), 39–54. https://doi.org/10.1108/IJHMA-12-2019-0123

19.

World Bank (2020), World Bank Open Data. Retrieved from https://datos.bancomundial.org/ (accessed 03 March 2021).

Asian Journal of Business Environment

e-Submission OA Policy