Real Estate Tax Comes to Egypt Essay

1951 WordsMar 5, 20138 Pages
Unlike other countries, in Egypt no matter how many residential or non-residential real estate units an individual or businesses own, the state enforces no taxes on this property. Over the years, this has opened the door to profiteers to buyout real estate as a form of investment, and benefit from annual double digit growth in market prices. This is about to change, as after five years of discussions, the real estate tax law is going through starting July 2013, by order from the President announced Dec. 6. And despite taking five years to discuss, Law 103 for 2012, the final iteration of the property law is still vague about important issues such as valuation mechanisms. It also added new concerns related to how businesses with specialized properties such as factories will be taxed. Youssef Botros Ghali, former finance minister, first introduced the real estate tax in 2008 as a way of taxing the wealthy and regulating the real estate market. However, it was never enacted until SCAF in 2011 announced that as part of trying to achieve social equality it would be applied January 2013. This was later postponed by President Mohamed Morsi six more months based on a recommendation from the government, its aim is to let the wealthy contribute in plugging the budget deficit gap. The tax will be applied nationwide on residential buildings whose market value is above LE 2 million with the second home not exempt regardless of its market price and, for the first time, non-residential buildings excluding not-for-profit educational buildings, hospitals, clinics and orphanages. The law states that the property tax will be 10 percent of the annual rent rate, which will be mathematically derived from the net price of the land and building after deducting 30 percent and 32 percent of its market price for maintenance for residential and non-residential building respectively. Law

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