Egypt will start levying property tax starting January 2013, four years after the Property Tax Law was issued in 2008, the head of the Tax Authority said Wednesday.
The tax was repeatedly postponed in recent years, but it has now become crucial to curbing the budget deficit.
Property owners will be required to pay taxes on their holdings from 2013 only and not retroactively from the date the law was issued, Tarek Farrag was quoted as saying in a statement issued by the finance ministry.
"The law will be implemented without amendments," Farrag said.
Several amendments to the law were proposed by the finance ministry to exempt single home owners, and raise exemption levels for property to LE2 million up from LE500,000.
The amendments, however, were never passed, so the law will be implemented as issued in 2008, according to Farrag.
Property taxes are expected to bring in some extra LE2-LE3 billion in revenues.
The tax indicates that a progressive burden will be imposed on properties with a market value of LE500,000 (approximately $83,000) or more, and a annual rent value exceeding LE6,000 (approximately $1,000).
The law stipulates that local committees are to be formed to estimate the rent value of properties. From this figure, 30 per cent will be deducted to cover maintenance expenses, and then LE6,000 or less exempted.
The remaining figure will be taxed at a rate of 10 per cent. The following example illustrates how properties will be taxed.
Annual Rent LE24,000
Less: Maintenance (30%) LE 16,800
Less: Exemption Amount (LE6,000) LE10,800
Tax amount (10%) LE1,080
The tax was originally intended to be implemented starting January 2012, but in October 2011 the then ruling Supreme Council of the Armed Forces (SCAF) postponed it to 2013.
Egypt currently implements a near flat tax rate of 20 per cent on all corporations and individuals. Individuals making less than LE40,000 per year are taxed at a lower rate. A general sales tax of 10 per cent is also levied.
No capital gains or dividend taxes are in place.
Tax revenues make up two thirds of total state revenues at LE267 billion ($44.5 billion), with income taxes making nearly half of this amount. Out of all income taxes, wage taxes make up over a quarter at 30 per cent.