Four years after it first appeared, the real estate law is ready to be implemented in July, Ahmed Kotb reports Minister of Finance Momtaz El-Said announced Saturday that some amendments have been made to the draft real estate law that will be presented to parliament in the hope it will be applied in the fiscal year 2012/ 2013 which starts in July. The amendments, approved by the Cabinet, includes exempting private residences and increasing the tax exemption limit for other properties from LE500,000 to LE1.5 million. Other changes to the law include forming a specialised committee in every governorate to evaluate properties according to current market prices. Non-profit educational and health institutions will not pay the tax. El-Said also said that the new taxation system is expected to generate some LE1 billion in the first year of its application, adding that 25 per cent of the revenues will be directed to the development of slums. The controversial Law 196 was passed in July 2008 to replace the 1954 property tax law but faced considerable opposition amid the repercussions of the global financial crisis in 2008. The new tax was supposed to be applied from the beginning of 2009, but the finance minister at the time, Youssef Boutros Ghali, delayed the schedule by a year as a result of the economic slowdown caused by the global economic crisis. The law was delayed once again in 2010 following wide public resistance to the law and was effectively frozen since. Ibrahim Abdel-Fattah, the owner of a real estate company, argues that the real estate tax law should not be levied until the economy and regulatory bodies are stable again. "The law, regardless of the amendments, will add financial burdens to many property owners," he stated. Moreover, regulatory bodies are not ready to face evasive manoeuvres by some owners, he said. For example, some wealthy property owners who have two or three properties each, owned on paper by different members of the family, can easily prepare papers to establish that each is living in one only of the properties, in order to avoid paying the tax. "Regulatory bodies are not ready yet to face such a situation, which will be unfair to many other committed taxpayers," he said. However, there are some experts who welcome the new property tax law with the current amendments. "The changes announced make the law very suitable," said Ahmed El-Zeini, head of the building materials division at the Cairo Chamber of Commerce. He added that 90 per cent of Egyptians will not be affected, and that the law will give a sense of relief to the middle class in particular. El-Zeini believes the new law will make property owners use their unused units, which will raise the number of residential units available and consequently alleviate the housing problem in Egypt.
