Back to the complete issue
Sunday, 12 August 2018

Real estate taxes gripping the nation these past few weeks

Real estate taxes gripping the nation these past few weeks: The Finance Ministry’s attempts to reform and amend the real estate tax has seen it kick up a hornet’s nest in the local press and the airwaves these past few weeks. We attempt to chart these efforts and the reactions.

The story so far: A government source had revealed to us back in June that the Madbouly Cabinet was devising a new real estate tax formula as part of a major real estate tax overhaul that would impact both business and private landholdings. This new formula would set “clear and simplified” guidelines for the tax assessment of industrial properties, hotels, ports and airports, our sources told us. It was then revealed to us that the Finance Ministry had developed a real estate tax formula for the oil and gas industry, which already pays the highest corporate taxes in the nation. The ministry passed an amendment to real estate laws last month setting a 2.5% levy on the disposition or quick sale value of real estate assets. Furthermore, the ministry is reportedly planning to conduct a major survey and appraisal of the country’s real estate assets this year.

While the specifics of the new amendments are largely still a mystery, PricewaterhouseCoopers has an excellent brief in Arabic (pdf) on what was previously said and how it impacts current real estate tax legislation.

Naturally, the move has caused backlash among the business community and the general landowning public. Business associations, including Union of Investors Associations, are urging the Finance Ministry to end real estate taxes on industry land. The Union is now proposing a EGP 5,000 tax for every 1,000 sqm of land owned. Finance Minister Mohamed Maait reportedly promised them to revisit how the ministry taxes industrial land, according to Youm7. The backlash among private citizens was evident in the talk shows, prompting the ministry to repeatedly send officials to explain the tax on the airwaves. Opinion writers were not impressed by the efforts in handling this backlash.

More recently, the Finance Ministry decided on Thursday to push the deadline for real estate tax payments to 15 October from 15 August, according to an official statement (pdf). The extension comes penalty-free and at the Real Estate Tax Authority’s request due to overcrowding at their offices, which has led to long wait times. The ministry said this extension will be its last. The deadline for settling real estate had initially been set for 15 July.

While we’re on the topic, the central bank will not be freezing clients’ assets as a way of coercing them into paying their real estate taxes. Council of State Vice President and the CBE’s legal adviser Tamer El Daqaq told Ahram Online that “baseless” rumors suggesting as much have been swirling around, citing an unauthorized document. The CBE is taking legal action against those responsible for circulating the document and individuals who “spread the rumor,” according to El Daqaq.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2018 Enterprise Ventures LLC.