By Abd Al-Razaq Al-Shuweikhi
Egypt’s Ministry of Finance recently agreed to requests made by the country’s Tourist Ministry to restructure real estate taxes imposed on hotels and resort facilities based on their “market replacement value”.
Towfiq Kamel, President of the Egyptian Hotels Association, said that the country’s Finance Ministry is set to impose the new tax starting July 2013, after determining the market replacement value of Egypt’s various hotel and resort facilities. He stated that this new policy is one of the best to have recently been passed by the country’s Finance Ministry.
However, Kamel stated that the state of the market today was not strong enough to withstand the imposition of a new series of taxes.
He added that the association was currently in negotiations with the country’s Real Estate Tax Authority to determine new standards to be used to set the market replacement value of property. Such rates will be determined based on the sale price of a room to guests and tenants, as opposed to costs of construction, which range from EGP 500,000 to EGP 1m per room.
The country’s Real Estate Tax Authority, which falls under the jurisdiction of the Tourist Ministry, is currently responsible for the oversight of upwards of 1200 hotel and resort facilities. The Egyptian Hotels Association further called for the review of all forms prepared by the Finance Ministry, which would detail statistics regarding all of the country’s hotel and resort facilities in order to identify the appropriate tax rate for each as quickly as possible.
According to a memorandum released by the country’s previous Finance Minister, Mumtaz al-Sayyid, and Hisham Zazua, Egypt’s Minister of Tourism, each facility’s market replacement value will be determined by a series of mathematical formulas and statistics gathered by the Finance Ministry.