CAIRO: Egypt will start implementing the controversial property tax law this coming January, Minister of Finance Youssef Boutros-Ghali said earlier this week.
Ghali released this week the regulations for the new Property Tax Law, to be applied to residential and commercial property taxes at the start of 2010.
The law exempts houses and flats valued less than LE 450,000 while imposing a LE 660 annual tax on units valued at LE 1 million.
Individuals and corporations must submit their real estate assets by the end of the year for valuation, which will take into account location, quality of construction, provision of basic services and proximity to public parks, health and education facilities, the local press reported.
Taxes on industrial real estate would be deducted from the overall income tax paid by the owners.
No more details were given regarding the other categories, such as property whose value ranges between LE 450,000 and LE 1 million, or residential units exceeding LE 5 million.
The property tax law was proposed a couple of years ago, and sparked heated debate among parliamentarians and the general public as it was being discussed in 2008. Those who supported said it adheres to social solidarity, while the opposing side said it will put a strain on a majority of Egyptians.
Owners will be able to appeal the valuation of their properties within 60 days of the decision, reported the Middle East News Agency (MENA), and the units will be appraised every five years.
Tarek Farag, chairman of the Real Estate Tax Authority, told the local press that the taxes will not be an added burden on citizens since “90 percent of Egyptians won’t pay since it only applied to property that exceeds LE 450, 000.
The new law will, according to Farag, places the tax at 10 percent – down from the original 40 percent – with LE 6,000 waived from the original evaluation, and 30 percent off the total value of the property for maintenance expenses.
Osama El-Kholy, who just built a three-storey house in Hadayek Al-Ahram on the outskirts of Cairo, is wary of the next step: appraisal. “How will property be evaluated? Egyptians do not have a good history with the tax system, he said.
Owners of unfinished properties are not required to file property taxes, according to Farag.
Some analysts criticized the timing of implementing this law, as the country is still suffering the effects of the economic crisis. “The law should have been postponed because of the crisis, Rashad Abdou, economics professor at Cairo University, said.
The tax authority will conduct a real estate wealth survey in five governorates (Cairo, Helwan, Sixth of October, Giza and Qaliubyia).