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Tuesday, 28 July 2020

Real estate developers oppose VAT on non-residential properties

LEGISLATION WATCH- Real estate developers oppose VAT on non-residential properties: Real estate developers have pushed back on proposed legislative amendments that would impose a 14% value-added tax (VAT) on the sale and rental of non-residential properties, the local press reports. The Federation of Egyptian Industries’ real estate division is currently petitioning the Finance Ministry to cancel the planned levy, which they say will raise costs for businesses already struggling to cope with muted consumer demand caused by the coronavirus pandemic.

Government sources say the change will iron out inconsistencies in the VAT law, which impose the tax on some non-residential properties but not others. The law currently subjects stores and office spaces rented within malls to VAT, but grants exemptions to non-residential properties outside of malls.

Background: The cabinet’s economic group last month signed off on proposed changes to the 2016 VAT Tax Act that would amend the list of goods and services on which VAT is remitted. The amendments would subject most commercial advertising to the tax but scrap the 20% stamp tax on ads, and allow tourists to claim VAT rebates. Special economic zones would enjoy the same VAT treatment as freezones, and the Health Ministry would be given the authority to issue decrees exempting pharma components from the tax.

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