New Egyptian property tax law slated to go into effect in July

Property ownership is addressed under Egypt's new real estate tax law. Apartment buildings in Cairo are pictured above. [Waleed Abu al-Khair/Al-Shorfa]

Property ownership is addressed under Egypt's new real estate tax law. Apartment buildings in Cairo are pictured above. [Waleed Abu al-Khair/Al-Shorfa]

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An amended real estate tax law is slated to go into effect in Egypt in early July.

The Egyptian Ministry of Finance and the Tax Authority have finished updating the legislation, the implementation of which has been postponed several times since it was issued in 2008.

Specialists and investors told Al-Shorfa they see the new taxes as fair and equitable to property owners.

The amendments aim to achieve social justice, said Mohammed Ezzat, a legal advisor to several real estate development companies.

They provide for the allocation of 25% of tax proceeds to improve conditions in slums, while 25% go to the provinces and the rest to the country's public treasury, he said.

"The amendments do not involve any tax increases, as they are regulatory in nature and contain amendments to some legal aspects that offer relief to both parties," Ezzat told Al-Shorfa.

Under the new amendments, educational institutions, hospitals, clinics, shelters and non-profit charities will be given a permanent exemption from taxes, while a previous exemption on buildings owned by political parties, trade unions and professional organisations will be annulled, he said.

The amendments also increase the exemption limit set for each unit in a residential property to 2 million pounds ($289,000), while limiting the exemption to only one unit per owner.

Other amendments stipulate regulations that apply to cases where a property is used for both residential and commercial purposes.

Property ownership also is addressed in the amendments, and specific guidance is offered for those holding certified and non-certified property deeds, he said.

"The tax now applies to [properties with] non-certified deeds as well, which addresses the causes of many of the legal disputes between property owners on the one hand and property owners and tax authorities on the other," he said.

"The most important provision of the new law and its amendments is that it levies a tax on all types of buildings in all Egyptian provinces, while in the past taxes were levied [on properties] inside cities only," said Shamel al-Muallem, head of a tax appeals committee chamber at the Ministry of Finance.

Collection expected to begin in 2014

Collection is expected to be postponed for six months after the law goes into effect, until January 2014, "to allow for the completion of an advertising campaign to spread awareness among citizens about the importance of adhering to the real estate tax system and to inform them about the new amendments", al-Muallem told Al-Shorfa.

An electronic system will be adopted in the coming period that issues a national identification number for each real estate property to prevent duplication, he said. This also will contain full data on property owners and the real estate they own in every province.

"This would facilitate and accelerate the transfer of ownership and tax liability when properties are sold," he said.

The Real Estate Tax Authority has begun training its staff on the new systems, said Hosni Abdel Raouf, who works for the Authority's collection committees.

"All regions have been surveyed by special committees for the purpose of collecting 2010 and 2011 taxes, and work has commenced on 2012 taxes in areas that are accessible and can be surveyed, given the security situation," he told Al-Shorfa.

The survey and collection process is currently focused on some areas of Cairo, al-Maadi and the northern coast, Abdel Raouf said.

Real estate dealers, including Farouq Abdul Latif, welcomed the new amendments.

"The new tax amendments will give the Egyptian real estate sector legal transparency, which is required to attract new investors to all sectors of the Egyptian market, namely the tourism, residential and commercial sectors," he told Al-Shorfa.

"Investment in the real estate market is a long-term investment, and therefore an appropriate one under the current economic conditions, which carry some risks," he said.

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    سيف الدين على

    2013-5-8

    No one can deny that investment in real estate marketing is very good investment. We all lack and need this investment now. All references refer to the necessity to join real estate investment. Also, through imposing real estate tax in next July, it will have positive result from all Egyptian people. Egyptians need support and to have great importance in contributing creating best future for Egyptian real estate. The Egyptian government works now to give Egyptians all they need to contribute positively in Egypt after fearing real estate investment. The chance comes to Egyptian people to prove to the world that they able to cope with the situation. We wish all people contribute and not fear from real estate tax in Egypt.

  • كاريمان كرم

    2013-5-8

    I see that all experiments made by the government and officers are performed against the Egyptian people. What is the meaning of real estate tax? Who now in Egyptian people able to impose on people more taxes. We did not imagine that our life goes like that in Egypt. We wish more investigations for avoiding Egyptian people lose his way in that matter. Egyptian government tries now to recover the Egyptian people money anyway? We did not satisfy anyway with this. We wish the Egyptian government works one day to prepare the conditions for Egyptians to live in Egypt happily instead of these actions.

  • على زايد

    2013-5-7

    A periodic allowance of EGP 4 – which is the price of half a kilo of garlic and my age is 50 years with 17 year of service – plus the 12% that Your Excellency has announced cannot offset the100% price hike. Mr. Minister, how much did the electricity bill increase? How much did water prices increase? How much did transportation fair increase due to fuel? You can see the (prices of) private tuition at public schools. How much did medicine prices increase? How big is the ghost of tax deductions applied to salaries? Let me tell Your Excellency that we don’t want a penny from you, provided that you provide us with a dignified life. Let us live a basic, humane life and you keep the rest, but remember the objectives of the January revolution: bread, freedom, and social justice.

  • كاظم شبيب

    2013-5-3

    What shall the Egyptian citizen do if he has inherited a house from his father with a value that exceeds the value determined by the law of the estate tax, while he cannot afford to pay such tax? I think he has no other option but selling this house, and living in a modest apartment in order to avoid such tax. This law will worsen the conditions of Egyptians, and there’s no laws that make the citizen feel safe and secure. How can Egyptians pay taxes on houses or real estates that they already paid tax when buying or building them? By this way, Egyptians would be living to pay taxes on each and every move they make. Now the question is, the Egyptians are already paying a lot of taxes including this real estate tax that will be enforced in July, so what did the state provide for those poor people as they’re having mediocre education, and hospitals are filled with diseases? May God protect you, Egypt.

  • ستار خلف

    2013-5-3

    The weird thing in the Egyptian State is that they’re depending on getting more than 72% of their incomes from the pockets of the Egyptian people, by implementing a variety of taxes, which exert a great burden on the Egyptians like that of the real estate tax. Unfortunately, the current government didn’t learn the lesson from the era of Mubarak, and such taxes were one of the reasons for the revolution, as the people couldn’t accept it psychologically. And Morsi is still implementing the same policy, as people will get angry over him and he will lose the people’s love in the first few months of his rule. The people who can barely find bread to eat will be surprised with a new tax called the real estate tax to be imposed in the middle of this year and I bet it could be a reason for a new revolution, because if people couldn’t even afford buying bread, how will they ever be able to pay a housing tax on the place where they live and probably they inherited it.