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Friday, 06 December 2019

Egypt PM forms committee to determine how to implement coastal land-use tax following controversy

Mahmoud Aziz , Thursday 5 Sep 2019
Northern coast of Egypt (Photo: Ahram Online)
Northern coast of Egypt (Photo: Ahram Online)
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Egypt's Local Development Ministry said on Wednesday that Prime Minister Mostafa Madbouly has ordered the formation of a legal committee to determine how to implement a tax on land usage in the North Coast region.

The decision comes a few months after a government official caused controversy by announcing that coastal resort towns in Egypt's North Coast will be obligated to pay a land-use tax. 

The committee comprises the head of the cabinet's Counsellors Authority and representatives from the Local Development Ministry, governorates and the Tourism Development Authority.

On 22 August, El-Dabaa city head Hassan Abu Taleb announced that Egypt's Minister of Local Development had imposed an EGP 150 land-use tax for every square metre of coastal land in the North Coast's resort towns and beaches, which aims to maximise benefits from unused assets.

One day after the announcement, Abu-Taleb was relieved from his post by the Matrouh governor for giving "false" press statement, without further details.

Minister of Local Development Mahmoud Shaarawy later told Al-Mal newspaper that Abu Taleb had made "inaccurate" statements about the value of the tax and the intention to implement it retroactively.

Shaarawy said that the use tax is in accordance with local governance Article 51 of the year 1979, adding that the details on how the tax will be implemented will be determined by the newly formed committee.

On 8 July, media outlets reported that Alexandria governorate sent a letter to the board of directors of the 'Diplomats' resort town in the North Coast saying that the resort owes EGP 418,000 in use taxes for the period of 2003 and until 2019.

The letter said that if the tax is not paid, the governorate will resort to legal measures including imposing administrative guardianship of the resort town.

On 24 August, the head of local administration committee in parliament Ahmed El-Segieny affirmed that coasts and beaches are publically owned and do not belong to the resorts towns.

El-Segieny affirmed that the tax aims to bolster the country's budget and help in developing infrastructure in impoverished villages.

El-Segieny explained that all tourist resorts, hotels, and restaurants operate on coastal areas by a right of use contract that is renewed after a specified time period.

It is not clear if the tax will apply to resorts in the Red Sea governorate or just the North Coast.

For the past two years, South Sinai governorate has been imposing a use tax on coastal hotels and resorts in the governorate.

In his statements on Wednesday, the Local Development Minister did not specify when the cabinet committee would complete its study or whether it should be approved by parliament and ratified by the president before its implementation.

There are more than 120 tourist resorts covering 1,050 kilometres along the northern coast of Egypt, which officially extends from Rafah in East Sinai to Al-Saloum in the country's far west near the Libyan border.

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