With Egypt’s real estate market still in recovery mode, and an upcoming election in the balance, recent property tax legislation has been met with resistance and uncertainty. The new law primarily impacts wealthy owners of expensive property, but officials claim the added tax burden will be relatively minor. For more on this, see the following article from Property Wire.
The new property tax law in Egypt is likely to be introduced gradually, the country’s president has confirmed.
President Mubarak said there are no plans to change the tax which is facing considerable opposition from those that claim it will be too much for a recovering real estate market as it will make owning property more expensive.
A government spokesman said that the property tax will not be a huge financial burden on real estate owners. The law, passed in July 2008 but not yet implemented is now set to be introduced gradually and some say that is due to the upcoming general election as Mubarak does not want to alienate wealthier voters.
But experts are warning that there is considerable confusion about the tax. According to Reham ElDesoki, senior economist at Beltone Financial, there is a feeling that the tax should not be levied until greater economic stability has returned to the country. ‘The president’s announcement will increase the confusion currently prevalent in the market. But the new law will not add significant financial burdens to property owners in Egypt,’ she said.
‘Although the law will generate revenues, it’s not a big payment compared to the property’s market value. It’s very small,’ she said.
Reports so far indicate that the annual tax on property that is worth LE 500,000 will be LE 30, while the annual tax on property that is valued at LE 1 million will be LE 660.
Beltone believes that the tax could have additional positive benefits, causing property owners to make economic use of their unused assets, thus raising property stock in economic activity as well as the number of residential units available, a welcome development in a country with an acute housing shortage.
Abdel Fatah El-Gabaly, head of the Al-Ahram Center for Strategic and Political Studies’ economics unit, says it will only be paid by wealthier property owners. ‘This is a burden only for the rich people. This contrasts to the land property tax, that was postponed or deleted, two years ago,’ he said.
‘In my opinion it is because this law has a negative effect on rich people, and they have a voice in the media and power to affect the media, that makes the big debate about this law. When this law was discussed in parliament, there was no debate about it, but in the implementation there is a big debate,’ he added.
El-Gabaly said that implementation will take time. It will mean evaluations of every property and a new organization will need to be set up to undertake the work.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.