Minister of Finance Ahmed Galal announced that the real estate tax law became effective in the industrial sector and will be implemented according to what has been agreed upon with the industrial community and production sectors, according to a statement from Ministry of Industry and Foreign Trade.
This came during a joint Monday meeting between Galal and Minister of Industry and Foreign Trade Mounir Fakhry Abdel Nour to discuss ways of implementing this law and how to calculate taxes on industrial installations. The meeting was also attended by Mohamed El-Sewidy, the head of Federation of Egyptian Industries and the head of Real Estate Tax Authority.
Galal stated that amendments to the real estate tax law have been approved after being presented to different economic and industrial sectors.
Amendments will not result in any burdens on the industrial sector, and any modifications made to the tax system are discussed with the concerned parties, he added.
“The amendments include modifying the committees of listing, assessment and appeal to consist of representatives from Real Estate Tax Authority, Federation of Industries and another objective party, whether an expert from the Faculty of Engineering or a legal expert,” Galal said.
He added that method of evaluation of this tax depends on the calculated value of the land according to the current prices discounting the depreciation and maintenance expenses.
Galal explained that some cases are exceptional and will be handled accordingly, “especially the cases of insolvent factories,” he said, adding that the government has recently allocated EGP 500m to support these factories.
Abdel Nour stated that the real estate tax law in developed countries comprises about 10% of the tax revenues, “while it represents less than 1% in Egypt,” adding that these amendments come within the legislative and financial reforms which the government is implementing now.
“Implementing this tax law in the coming phase will support the general budget in the medium and long term,” Abdel Nour said.
El-Sewidy was quoted as saying in the statement that the industrial installations are subject to the real estate tax law in the coming period.
Recent amendments to the real estate tax law have been made by the Ministry of Finance and approved by the cabinet earlier this month. It expands tax exempt tranche to include industrial and commercial units along with the normal residential units.
The new amendments state that owners of shops who collect EGP 1,200 in annual rent will be exempted from taxes.
However, the approval of these amendments is yet to be signed by interim president Adly Mansour, said Anwar Farag, legal advisor to the real estate division at the ministry’s Egyptian Tax Authority, earlier in November.
With regard to the changes made to the residential tax law, Farag said that if the collective rent value of residential properties does not exceed EGP 24,000 annually, the owners would also be exempted from paying taxes.
Of the collected property taxes, 50% will be used to develop Egyptian slums and poor areas.
The real estate tax law is expected to generate EGP 3m in revenues once its first phase is complete.