In the same context, the minister announces the following:
Tax exemption limit increases to L.E 24,000 up from L.E 18 under the old law
Real Estate Revenues (Awaid) have been enforced since 1880 with proceeds exceeding 60% of general revenues
Tax exemptions are still granted to properties subject to the Old Lease Law
Minister of Finance, Dr. Mohammed Maait, notes that despite the fact that Real Estate Tax Law, issued in 2008, was first suspended and undergone afterwards many legislative amendments, key concepts and provisions of the same are still provided for therein; most significantly, entailing an expenditure mechanism for the maintenance of real estate properties. Namely, 30% of the annual rental value for a residential unit and 32% for non- residential ones shall be allocated for maintenance expenses paid by taxpayers as a means to protect the Egyptian real estate wealth.
The new applicable law has many advantages, stresses the minister, referring to the increase effected in tax exemption limit reaching L.E. 24,000 up from L.E. 18 under the Old Lease Law, and this applies for the lessor whether holding one or more property units.
The minister also notes that one of the circulated fallacies is that real estate tax is a newly introduced tax despite being one of the oldest Egyptian taxes dating back to 1880, with proceeds around L.E. 5.2 millions out of the then total State revenues worth L.E. 8.5 millions. Previously, real estate tax revenues were referred to as "Awaid", accounting for more than 60% of the State budget. However, afterwards, such percentage decreased gradually to less than L.E. 230 million annually before enforcing the present applicable law in 2008, which is deemed insufficient for enabling the State to earnestly develop districts and proceed on tree-planting and street beautification plans.
The objective of real estate tax is to develop the entire structure of the Egyptian real estate wealth through several mechanisms. On top of which is compiling an inventory and doing a valuation of such assets, along with allocating 50% of the annual total proceeds for upgrading municipals and slums (divided evenly between them), notes the minister, pointing out that the ministry is currently working on to allocate such proceeds to the different governorates in abidance with the relevant law provision.
Addressing the issue of the Old Lease Law, the minister confirms that the present law in effect grants real estate tax exemptions to old properties subject to rent taxation systems, in accordance to provisions of several related laws, such as the two latest laws no. 49/1977 and 136/1981 on leasing, property selling and regulatory relation of lessor vs. lessee. Included also in the same context are other previously relevant enacted laws as long as the contractual relation of lessor vs. lessee remains unchanged by any legal manner; otherwise, the property shall be taxable.
Dr. Maait also refers to the fact that there are luxurious old real estate properties which are levied real estate taxes since decades under the name of Awaid (revenues) in small percentages paid by the lessor not the lessee, pointing out that the said taxes remain unchanged and ongoing.
Real Estate Tax Law provides many other tax exemptions, adds the minister. Namely , exemptions are granted to State-owned properties and publicly utilized ones; to building designated for performing religious practices and religion education; to built properties whose ownership are confiscated for public utilization; and to cemeteries and all under construction buildings.
Real estate tax exempted properties also include registered NGOs premises; labor organization buildings designated for their administrative and relevant purposes; non-profit educational buildings, hospitals, clinics, shelters and charitable institutions; premises for political parties on condition of being used for their relevant purposes. Moreover, exemptions are granted to property units used by citizens as resident units of net annual rental values less than L.E. 24 thousands per each, and to each property unit used for commercial, industrial, administrative, professional purposes of net annual rental value less than L.E. 1200; whereby exceeding amounts for both categories shall be taxable.
Other exemptions include youth and sports centers, foreign government owned entities on condition of reciprocity of treatment, and non-profit occasion halls. Armed forces owned clubs, hotels, medical centers, hospitals, clinics and their surroundings are all tax exempted, adds the minister.