From 1954 To Today: Evolution Of Property Tax In Egypt – Property Taxes


To print this article, all you need is to be registered or login on Mondaq.com.

1429002a.jpg

The recent updates to the property tax law have sparked
discussions among property owners, tax professionals, and legal
experts alike. This article aims to demystify the property tax
regulations, highlighting the continuity from the 1954 law, changes
introduced, exemptions, and the implications for property owners
and tenants.

Key Changes in the Property Law

A pivotal aspect of this legislation is its adherence to the
rental value basis for tax assessment, maintaining a minimum tax
rate of 10%. This approach ensures a degree of stability and
predictability for property owners. Moreover, the law introduces a
crucial relationship-building measure by exempting unregistered
taxpayers from back taxes, provided they submit property
declarations within a year of the law’s enactment.

Background and Continuity

The property tax law does not introduce a novel tax but rather
builds upon the existing framework established by Law No. 56 of
1954. Known colloquially as “Al-Awaid” this tax has been
a longstanding obligation for property owners, levied on the rental
value of built properties. The tax rate is unified at 10% of the
annual rental value after deducting 30% for residential expenses
and 32% for non-residential expenses in exchange for all expenses
incurred by the taxpayer, including maintenance expenses.

Taxpayer Obligations and Exemptions

The responsibility for paying the property tax falls on the
property owner or the holder of a usufruct or exploitation right,
regardless of the individual’s or entity’s nature. Notably,
tenants are not obligated to pay the property tax directly but may
do so under specific conditions, ensuring their contributions are
acknowledged within their rent payments.

The law applies to all built properties across Egypt, with few
exceptions. Exempted entities include state-owned properties used
for public benefit, religious buildings, and properties
expropriated for public use. Additionally, specific exemptions are
granted to encourage compliance and ease the tax burden on certain
property owners.

Assessment and Taxation Process

The valuation of rental values is conducted by designated
committees, considering a myriad of objective factors such as
location, construction materials, and property age. The tax is set
at 10% of the net annual rent, with deductions allowed for
maintenance costs, ensuring fairness in the tax burden.

Transparency and Dispute Resolution

To foster transparency, the law mandates public announcements of
rental value assessments and provides mechanisms for taxpayers to
challenge these valuations. Committees formed for this purpose
include members from various backgrounds, ensuring a balanced and
fair review process.

Penalties and Compliance

The law specifies penalties for tax evasion, including fines and
compensation equal to the unpaid tax amount. It also outlines
consequences for late payments, emphasizing the government’s
commitment to enforcing compliance while offering mechanisms for
reconciliation in certain cases.

Latest incentives in implementing the law

In this regard, it is worth noting that there are protocols
between the Ministry of Finance and other ministries to organize
accounting for real estate tax in establishments subject to the
decisions of those ministries, such as the activity of tourism
establishments, petroleum, and some industrial activities.

It should also be noted that a decision was issued by the
Ministry of Finance regarding the state bearing the real estate tax
on behalf of some activities beginning in January of the year 2022
and for the following three years, such as mining activities,
manufacturing industries, the automobile industry, etc.

Conclusion

The property tax law represents a blend of continuity with past
regulations and adjustments to modernize and streamline the tax
assessment and collection process. By maintaining the rental value
as the tax base and introducing measures to encourage compliance
and transparency, the law aims to balance the needs of the state
with the interests of property owners. Property owners and tenants
alike must familiarize themselves with these changes to ensure
compliance and make informed decisions regarding their
property-related finances.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Tax from Egypt

Tax In Brief | Issue 114

ENS

This case concerns the taxpayer’s appeal to the Tax Court against additional VAT assessments raised by the Commissioner for the South African…

Tax Focus Newsletter – Jan/Feb 2024

SNG Grant Thornton

Welcome to the Tax Focus Jan/Feb 2024 Edition! To start the year off right, we understand the importance of staying informed and up-to-date on all things tax-related.

title_words_as_hashtags

Leave a Comment

Your email address will not be published. Required fields are marked *