Egyptian Real Estate Tax

Constructed real estate (buildings or property with buildings on it) is now subject to a new tax in Egypt. Last year, the Egyptian cabinet approved a draft law sponsored by Egyptian President Abdel Fatah al-Sisi to come into effect in 2015 and indeed, the law has been in place since January of this year. The announcement caused anger among Egyptian business owners as they claim that the new tax will mean further financial stress in the midst of an economic downturn. In response to criticism, the head of the Egyptian Real Estate Tax Department, Samia Husain, speaking for the Egyptian state, responded that the new law is necessary in order to improve the country’s finances. Furthermore, because it only applies to those who own real estate with a market value of more than two million Egyptian pounds (approximately 280,000 USD), most Egyptians will not be affected by it. Ahmad Alwakeel, Chairman of the Public Union for Egyptian Chambers of Commerce, backed Husain’s case, but also pointed out that the lower and middle classes might be indirectly impacted by the new tax as merchants will raise the prices of goods and services, passing the burden of the new tax to consumers. The same union official was also keen to highlight how exempting industrial establishments, associations and international organisations from the new tax is unacceptable. From a legal point of view, applying the law to one category while excluding another raised a number of moral questions, he opined. Mohammad Lukma, a member of the Egyptian Management Council for Construction and Development Contractors’ Union, added that it is unlikely that the new real estate tax law will have a negative effect on the Egyptian housing sector as it exempts a large category of the community, particularly those who own limited property. Head of the Construction Committee of the Egyptian Businessmen Association and real estate expert engineer, Salah Hijab, was also keen to add his voice to the debate. In defense of the tax, he said, “In light of the transparent announcement of the real estate tax and the clarification of all its aspects, we need a real estate investor able to put together a feasibility study on the projects that Egypt needs as we must avoid incurring a second real estate boom.”   

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