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Real Estate Tax

الضريبة العقارية - real estate tax

Real Estate tax is a tax that shall be paid by individuals or a legal person on its own properties.

According to Law no. 196 of 2008 regarding real estate tax does not impose a new tax, but it is imposed by the Law no. 56 of 1954, and it was known as “Returns Tax”, and its provisions has been reorganized by the applicable Law.

Who is the taxpayer?

A Taxpayer is a natural or legal person who has the right to own, utilize or exploit the property. The lessee is not considered is not considered as a taxpayer but considered to be jointly paying the tax with the taxpayer within the rent on him.

1- Properties subject to the Real Estate Tax

This tax applies to all properties residing on the territory of Egypt other than those not subject to taxation, whether they are leased or resided in by the owner in charge of the tax himself.

This means that all existing buildings are subject to taxation, whether they are built villas, buildings, floating house or chalets, regardless of their geographical location.

Also, the real estate tax imposes on any land whether it is used as a parking, plantation, rented, etc.…., and the real estate tax is not applicable on the not used lands.

All installation on the buildings either it is rented or with return are subject to the Real Estate tax, the new applicable Law defines the buildings that it is any residential or non-residential and not the entire building.

2- Properties not subject to Real Estate Tax

  1. Any State owned is not subject to the applicable Law, and it will be subject to the applicable Law from the day of buying it to the non-governmental new person or legal person.
  2. State owned which is allocated for the public benefits.
  3. The buildings that are used for religious purposes.
  4. The buildings that are have been took off for the public benefits from the date which is took off.
  5. Backyards and cemetery buildings.
  6. Also, under construction buildings are not subject to the tax.

3- Buildings exempted from the real estate tax

  1. Buildings of the departments that are owned by the associations and labor organizations and for their purposes are exempted from the real estate tax.
  2. Educational, hospitals, Dispensaries, shelters and non-profit institutions.
  3. Headquarters of the political parties only if they are used for their purposes.
  4. The unit that the taxpayer takes it as a main private residence for himself and his family, and whose net annual rental value is less than 24,000 (twenty-four thousand pounds).
  5. Each unit in a building used for commercial, industrial, administrative or professional purposes, and the annual net rental value is less than 1,200 pounds (one thousand two hundred pounds), provided that the excess is subject to tax.
  6. Sports centers established according to the applicable law.
  7. Real estates owned by foreign government agencies, on condition of reciprocity. If there is no similar tax in any of the foreign countries, the Minister may, after taking the opinion of the Minister of Foreign Affairs, exempt real estate owned therefrom from tax.
  8. Real estates non-profitable that are used for ceremonies.
  9. Armed Forces, clubs, hotels, complexes, medical centers, hospitals, military clinics, real estate built within their purposes, and other units which are proposed by the Armed Forces Authority not subject to the tax.

Private residence exempt procedures

The unit that the taxpayer takes it as a main private residence for himself and his family, and whose net annual rental value is less than 24,000 (twenty-four thousand pounds), after submitting form 6 and submit his owned real estate on form 6 refined contains any real estate owned or benefits from it.

Exemption limits for non-residential units

Each unit in a building used for commercial, industrial, administrative or professional purposes, and the annual net rental value is less than 1,200 pounds (one thousand two hundred pounds).

Examples of tax exemption

  • If the building is exempted according to Article (18) of the applicable Law.
  • If the land is not exploited.
  • If the building totally or partially collapsed which prevent the owner using it.

Calculations of the amount of real estate tax

The tax rate is unified at 10% of the annual rental value, after deducting 30% for residential expenses and 32% for non-residential expenses for all expenses incurred by the taxpayer, including maintenance expenses.

Requirements for industrial facilities exemption

The Ministry of Finance issued a decision no. 61 of 2022 on 30/8/2022 that the state’s public treasury will bear the amount of the real estate tax on behalf of the industrial facilities for three years starting from January 2022.

The list regarding the industrial activities about 19 industrial purposes with an amount of 3.3 Billion Egyptian pounds expected cost.

It included the textile industry, the engineering industries, the mining industries, the metal industries, the leather industry, wood and furniture, the automobile industry, the paper industry and its products, printing and publishing, the construction materials industry, porcelain, plates and refractories, the electronic and electrical industries, the manufacturing industries, the cement industry, iron, and ceramics.

Pharmaceutical industries, medical industries, chemical industries, food industries, plant and animal production, and poultry production and the purposes of the industrial facilities should be registered within the state’s economy to have the exemption from paying the tax.

Requirements and control for industrial facilities

The required procedures for the exemption, that the taxpayer, whether a natural or legal person, or his legal representative, submits an application on a form issued by the Real Estate Tax Authority for this purpose.

And to submit all the documents proofing the exemption from the real estate tax including, for example, a copy of the tax card, a copy of the commercial register, a copy of the national number card for natural persons, a power of attorney to the one who will submit the application on behalf of the taxpayer, a copy of the operating licenses, and a copy of the construction license, and a copy of the industrial register.