New Property Tax Law

[Zeiad Yehia]

How will the rental income be estimated, and who will do it.

How will the local government even know about the property if it is not registered.

How will anyone know how the property cost to decide if it above the threshold for value (400,000 EGP).
.

Please note that the local tax authorities will send committees to each area to scan and estimate the properties, according to the prevalent prices in the said area. A sale / usufruct contract will be a good assisting factor in this endeavour, yet in the event the price in the sale/usufruct contract was significantly different than the prevalent prices in the area, the latter will apply. Same goes for estimating the rental value. Information on the property owners are sent regularly to the tax authorities by developers (already),and this is how they will locate the current and legitimate owner.

It is very important to mention that the aforementioned tax law is NOT EFFECTIVE yet, but subject to discussion and amendment. The information I am writing here are obtained directly from the tax authorities, while they -themselves- are waiting for any potential amendments to the abovementioned regulations, since this law is not yet in effect, and is not yet published in the official newspapers "Al Wakaea Al Mesreyya"; the official newspaper dedicated for publishing new laws, whereas laws cannot be effective without being published there beforehand as a constitutional rule.

Consequently all what we can do regarding this law at the moment is to wait, since it can be amended at any point.

When it is officially issued and published, an interpretive bill will be issued, elucidating the exact procedures utilized over the inspection and execution process.


Al the best,

Zeiad Yehia
Solicitor

 

[Zeiad Yehia]

Thanks Queenie.

 

[queenie40something]

Your welcome and thanks for your post. That is exactly the info I was looking for.

 

[sinaiscuba]

Building Tax in Egypt

I own apartment in Delta Sharm which has been rented in long term, private contract. Delta management is not involved. Last days my tenant while paying utilities was asked to pay Building Tax, which is 680LE/6mths (2 bed apt.).

Does anybody know anything about this tax in Egypt? All I heard is that Egyptian Government has plans to introduce such tax but since next year.

 

[Georgina]

I own apartment in Delta Sharm which has been rented in long term, private contract. Delta management is not involved. Last days my tenant while paying utilities was asked to pay Building Tax, which is 680LE/6mths (2 bed apt.).

Does anybody know anything about this tax in Egypt? All I heard is that Egyptian Government has plans to introduce such tax but since next year.

I found this on the internet:

4.2. Building tax
Building tax is imposed on permanent structures located in
certain prescribed areas, and is not dependent on whether
the building is occupied or whether any actual income is
derived from the building. Buildings belonging to the
government and public enterprises are exempted from this
tax.

The tax base is determined according to the rental value of
the building and as with agricultural land, the rental
value is estimated by the tax authority. The tax authority
reviews the rental value every 10 years. The landlord is
responsible for the tax liability and he/she is required to
remit the estimated tax amount on an annual basis to the
tax authority.

It is imposed by Law No 56 of 1954.

The building tax is a progressive tax that ranges from 10%
to 40%.

 

[sinaiscuba]

Okey, but do I have to pay tax if my property is not registered yet? Well, whole Delta complex is not registered so why their management is asking to pay that tax?

 

[SuziQ2708]

Okey, but do I have to pay tax if my property is not registered yet? Well, whole Delta complex is not registered so why their management is asking to pay that tax?

Maybe worth leaving a post for Zeiad on the legal thread regarding this. I'm interested to know what this is all about too.

 

[sinaiscuba]

I already texted and e-mailed to Mr. Zeiad asking about Building Tax couple days ago (btw. he is my lawyer),however until today without answer.

My other friends who own apartment at Delta either, they haven't heard anything about Building Tax payment. Maybe because their apt. is empty now. I really don't know.

Payment is due on 31.12.2008. I just need to clarify what is all about.

 

[anokayperson]

I think many people would be interested in knowing about this tax.

 

[M Butler]

Building Tax

I would like to know as well.

I was under the impression that one of the main reasons for non registration of property in Egypt was to avoid tax.

Margaret

 

[Zeiad Yehia]

Dear All,

My clients have drawn my attention to this thread.

I confirm that the new property tax law is applicable on the next year. Properties subject to the new law are only those which purchase price exceed EGP 400,000. Those which are less in price than the aforementioned figure are entirely exempted.

Tax is estimated as 14% of the rental value of the property per annum. Values will be determined via governmental committees that will be sent to inspect property values in Egypt's various regions and areas.



Now back to Delta Sharm. Delta receives a tax request on the entire complex, hen their financial department distributes the requested values on the properties there. I have no idea what method they use in dividing the entire sum, but, however, the sum an owner / tenant receives is the estimated share of their property according to the total amount requested by tax authorities.


I believe that the new law will help terminating any confusion in the future, and I am glad it was legislated, because now, at least, you can know 'for certain' the bases of your taxation.


Anyway the sum of tax this tenant has received is very fair. Do the mathematics.


All the best,

Zeiad Yehia
Solicitor

 

[queenie40something]

I own apartment in Delta Sharm which has been rented in long term, private contract. Delta management is not involved. Last days my tenant while paying utilities was asked to pay Building Tax, which is 680LE/6mths (2 bed apt.).

Does anybody know anything about this tax in Egypt? All I heard is that Egyptian Government has plans to introduce such tax but since next year.

Hi SinaiScuba

I have moved your thread into this existing one on the new property tax laws. I know someone that had a couple of apartments on Delta. I think he has sold one but still has one that he rents long term - not you by any chance??

 

[sinaiscuba]

Hi Queenie, I guess it's me. Mr. Zeiad thank you for clarification, I think my tax rate is fair enough after mathematic ;-)))

 

[queenie40something]

Hi Sinai - is it Rob by any chance???

 

[sinaiscuba]

ooops, no Jeff

 

[queenie40something]

Lol well hello Jeff - I know Rob that had properties on Delta and Also Mohammed ( Ameno ) that lives there that used to have the internet cafe but now has coffee shop xx

 

[sinaiscuba]

I bought from Jeff. Lots of Britons bought apartments in Delta couple years ago. Moreover they got bargain price at that time when bought two or more apartments. Probably that's why Bristish community at Delta is really impressive there (lots of residents and tourists). Now prices are skyroceting (both sell and rent).

Probably I know Ameno, but don't remember all their names and nicknames

Queenie, you mentioned that Rob sold one of his apartments last time. It was 1 bed for 50k? I'm asking because there are only few apartments for sale at Delta on the market.

 

[queenie40something]

Hi Im sure it was the 2 bed that he sold to an Italian I think and he still rents out the 1 bed long term. It was a few months ago. I think he was trying to look for a villa but as you say the prices have gone up and he is looking elsewhere now out of Egypt. I did ask him a while ago about the new tax and he hadnt heard of it but I could see if he has received any thing now x

 

[queenie40something]

Has anyone got any up to date info on this please??

I checked Zeaid newspaper and cant find anyrhing.

 

[Georgina]

New Property Tax

I just received an email from a friend saying the law comes into force from January 2010 for Egyptians and Foreigners whether your property is registered or not.

I have been told a form needs to be sent before December 31st 2009 otherwise you will be charged LE2,000 penalty.

Calculations appear to be the same as the beginning of this thread i.e. Property value 1,000,000 tax of 660 to be paid.

No idea where you get or send this form. Have not heard anything from Customer Services in our town of El Gouna.

Prices in this whole area have changed so much in the past few years. I bought in 2003 so wonder if they take the value on the contract or the value now?

I have a pdf file of the form but a) it is too big to attach and b) it is in Arabic!

I will go to Customer Services here after the weekend to try and find out more.

Has anyone filled out a form yet??