JEDDAH, 1 January — The Shoura Council is currently working on a draft bill that will levy zakah on land used for commercial and investment purposes. The bill is being prepared by the Islamic affairs committee of the council and will be submitted for approval to the Council of Ministers. Speaking to Arab News, Hamoud Al-Badr, secretary-general of the council, said "the topic of zakah collection on commercial land will be discussed by the council in a few weeks after it has received the report."
Another member of the council had said on an earlier occasion that the proposal included a clear definition of land used for commercial purposes and the mechanism to levy zakah on it. The current regulations do not force anyone to pay zakah on land used for commercial purposes. But in other kinds of transactions, zakah has to be paid to the Zakah and Income Tax Department, which assesses the amount of zakah on the basis of periodic statements given by businessmen.
However, sources at the real estate market say that the proposed law will lead to a dramatic increase in real estate business as land not presently being used will come up for sale. This is because the new regulations will estimate the market price of plots of land and immediately levy zakah on them. The zakah may in some cases run into millions of riyals, as the price of land at prime locations are astronomically high.
"There are several plots of land in the city which remain unsold because the owners are waiting for higher prices. The proposed law will make such people accept a reasonable price and dispose of their property," said Salem Aqqab, a leading real estate businessman in Jeddah.
