Easing laws on real estate
The Planning and Budget Committee of the House of Representatives, the lower house of Egypt’s parliament, is set to discuss a bill proposing a reduction in the real-estate disposal tax.
The bill is an amendment to Article 42 of Income Tax Law 91/2005 that levies a 2.5 per cent tax on the sale of a property. The new bill proposes that a lump-sum tax be levied only once instead, which means that no taxes would be collected if the property is resold.
Yasser Omar, a member of the Planning and Budget Committee, said the bill would put the real-estate disposal tax at less than one per cent of the value of the property. With the new amendments, it will range between LE1,500 and LE4,000.
However, the amendments state that the reduced lump-sum tax shall also be levied on real-estate transactions taking place before 19 May 2013, while transactions carried out after that date will be taxed at 2.5 per cent of the value of the property.
The bill is meant to encourage taxpayers to meet their obligations, explained Erfan Fawzi, secretary-general of the Association for Scientific Tax Legislation. It is also meant to help end disputes between the Egyptian Tax Authority (ETA) and property owners, after the ETA had been fining people for delaying payment of the tax, he noted.
The proposed tax reduction is part of other measures intended to encourage people to register their property in public notary offices. While it was previously a requirement for anyone wishing to register their property to have paid the tax first, this is no longer the case. They can now also pay it later.
The current amendments come in tandem with the approval of the Legislative Committee of the House of Representatives on amendments to Real Estate Registry Law 114/1946 regulating work in notary offices on the registration of real estate by the public.
According to Fawzi, the government wants to encourage the public to register their properties so that it can better evaluate the country’s real-estate wealth. A registered property has a higher investment value, Omar said.
The amendments to the registry law aim at facilitating procedures, decreasing the number of documents required, setting a time frame for the approval of requests and objections to submitted documents, simplifying the regulations for checking papers, and opening the door to online transactions as part of the state’s digital transformation.
A memo on Law 114/1946 said it had not been substantially amended for many years, leading some people to turn their backs on registering their properties.
*A version of this article appears in print in the 3 February, 2022 edition of Al-Ahram Weekly.