The Real Estate Development Chamber of the Federation of Egyptian Industries (FEI) received a large number of complaints from real estate companies after the Egyptian Tax Authority announced the application of the value added tax (VAT) on the rented administrative and commercial units within the projects developed by companies in violation of the law.
Head of the chamber, Tarek Shoukry, said that applying VAT on rented administrative and commercial units violates the law that exempts these units from tax.
Shoukry pointed out that this action strongly affects investment in these activities, as companies carry new burdens added to the problems they face since the liberalisation of the exchange rate of the pound and the high price of construction raw materials, as well as raising interest rates and other economic reform decisions.
Shoukry pointed out that the administrative and commercial activities have been promoted recently both at the level of developers or customers. Furthermore, a large amount of money was pumped in these activities, but such action causes the reluctance of companies to inject new investments in administrative and commercial projects.
He noted that the chamber’s board of directors is holding a series of meetings during the coming period to prepare a memorandum on the repercussions of implementing the decision on the activity of the sector and to submit it to the concerned authorities to ensure compliance by the tax authority with the law.