Egypt is setting up a digital log of real estate asset sales to collect its 2.5% levy
EXCLUSIVE- Gov’t to digitize its log of real estate asset sales to collect 2.5% levy: The Tax Authority is setting up an electronic system to record real estate sales that would be subject to the 2.5% real estate tax, two government sources told Enterprise. The levy was set last June on the disposition or quick sale value of real estate assets under amendments to the tax code affecting real estate. Under the stipulations, property owners would not have access to basic services such as power and water until they are able to present proof that they have paid the necessary taxes. The system, which is currently operating on a trial basis and will be rolled out officially next month, is expected to increase the state’s real estate tax revenues to EGP 20 bn, compared to EGP 6.5 bn as of June 2018.
So how does it work? The new system will be apply to sales and purchases by individuals and companies and will run through real estate registry and public utility offices. Real estate developers will be required to only provide their clients with official property deeds once they present proof of having paid the tax. Real estate asset sales between individuals will be processed via the same system. The Justice Ministry will be responsible for logging legal cases filed for transfer of ownership between individuals, while the Electricity Ministry will do the same for requests to change homeowner information for electricity meters.
Background: A government source told us last 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.