Back to the complete issue
Monday, 23 September 2019

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.

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. © 2021 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of Commercial International Bank (tax ID: 204-891-949), the largest private-sector bank in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; and Act Financial (tax ID: 493-924-612), the leading activist investor in Egypt; and Abu Auf (tax ID: 584-628-846), the leading health foodmaker in Egypt and the region.