The tax exemption threshold for privately-owned houses has been doubled to EGP 4 mn, a government source told EnterpriseAM. The news follows the Madbouly government giving the green lightto amendments to the Property Tax Law last week.

We already knew this was coming: A senior government official confirmed to us in March that the Finance Ministry was looking to amend the property tax law to raise the exemption threshold to EGP 4-5 mn, up from EGP 2 mn currently, in light of rising property prices and inflation. A few months earlier, Deputy Finance Minister for Tax Policy Sherif Al Kilani told us that the current exemption threshold became “outdated due to inflation and rising property prices.” He added that the ministry was considering either raising the cap or exempting private family residences entirely while taxing additional properties.

Some 30% of the unit’s value has been deducted for maintenance and to account for developments in the real estate market to ease the burden on citizens, the source said. An automated unified real estate tax platform is currently in the trial phase. The platform will allow real estate units to be registered, and taxpayers can submit a unified file for all real estate holdings without being restricted to the geographical location of the residential or administrative unit.

The first phase of the property tax changes will focus on ten urban areas expected to bring in the greatest chunk of targeted revenues, including the New Administrative Capital, the North Coast, Sheikh Zayed, and the Fifth Settlement, before expanding nationwide, according to the source. Residential compounds are expected to account for 450k units out of a total of 45 mn housing units, which are estimated to shape Egypt’s real estate wealth, given the lack of an accurate inventory, according to the source.

Doubling the target: The nation’s real estate assets are expected to generate some EGP 18 bn in tax revenues in the coming fiscal year, up from a targeted EGP 8 bn in FY 2024-2025, according to our source. The projected increase reflects higher valuations across the key urban areas mentioned above.

Dispute settlements and waiving late payment interest will yield some EGP 7 bn, according to the source, who confirmed that the late arrears come on top of the ministry’s priorities. “The amendments to the law will provide unprecedented incentives by waiving late payment interest, and ensure that fines do not exceed the original tax,” the source added.

What the amendments entail: Among the most notable amendments is the introduction of a clause exempting taxpayers from tax if the property cannot be utilized due to emergency circumstances or demolition. The amendments also set a cap for late payment fines and regulate procedures for automatically raising the tax. The amendments also stipulate the recognition of electronic payment receipts, the establishment of committees to waive the tax and late payment fees, along with a temporary exemption upon full payment within a specified period.

The draft law will also develop the tax appeal system by allowing appeals of inventory and rental value to be submitted electronically, in addition to considering the Appeals Committee’s decision as the basis for tax payment, thus reducing disputes.

ICYMI: The Finance Ministry was in the process of selecting three to four private sector consulting firms to help reassess Egypt’s real estate assets and propose new valuation methods for the property tax system. The consulting firms are expected to be selected and begin work this month. The new valuations — expected to be out in 2H 2025 — are part of a broader strategic overhaul of the property tax law.

Utilities as an accurate inventory tool: Public utility bodies, such as electricity, natural gas, and water, will cooperate in the coming period to utilize their data to update the database in the targeted areas. The transitional period between each phase has not yet been determined, but “we will expedite the inventory and tax assessment processes and allow the submission of electronic forms to obtain a private housing exemption or submit reconciliations for late arrears. This will be done entirely electronically to facilitate the procedures,” according to the source.

What’s next: The cabinet has yet to refer the draft law to the House of Representatives for discussion.

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