In recent days, there has been a lot of confusion and misinformation circulating regarding Egypt’s new property wealth tax law. Many are under the misconception that anyone who owns property will be subject to this tax, but that’s far from the truth. Let’s break down the facts in simple terms.

What Is the “New” Property Wealth Tax?

The Egyptian government has introduced a property wealth tax as a response to the growing trend of renting residential units for substantial monthly sums. This tax aims to generate revenue and ensure that those who earn income from property rentals contribute their fair share to the economy.

Who Does the Tax Apply To?

The property wealth tax is applicable to individuals who own and rent out residential, vacation, or commercial units. It’s not a blanket tax that covers all property owners. If you own a property and are renting it out, whether on a short-term or long-term basis, you might be subject to this tax.

How Is the Tax Calculated?

The tax rate varies based on the level of your net income from property rentals. The rates range from 2.5% to 27.5%. However, it’s important to note that 50% of your revenue can be deducted as costs and expenses before the tax is calculated.

Important Points to Remember:

1. The property wealth tax is not new. It has been in place for years and is aimed at those who earn income from renting out properties.
2. If you earn an annual net income from renting a unit that exceeds EGP 21,000 (approximately $680), you’re required to file a tax declaration with the tax authority.
3. The tax is calculated based on your net income from property rentals, after deducting 50% of your revenue for costs and expenses.
4. The tax rates are progressive, meaning they increase as your net income rises.
5. If your net income from property rentals doesn’t exceed EGP 21,000, you are exempt from filing a tax declaration.

Avoiding Penalties:

Failure to comply with the tax law can result in penalties. If you don’t pay the tax on time, you might be subject to fines based on the central bank’s announced credit and discount rates.

In summary, the new property wealth tax in Egypt is targeted at individuals who earn income from renting out properties, not all property owners. If you fall into this category, it’s crucial to understand your obligations, file the necessary tax declarations, and pay your taxes on time to avoid penalties. Remember, accurate information is key to navigating this new tax law successfully.