Modification Of Tax On Actual Property Disposition (Authorized Alert 145) – Tax


Amendment Of Tax On Real Estate Disposition (Legal Alert 145)

10 June 2021

Andersen- Maher Milad Iskander & Co

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Law no. 5 of 2021

On March 6th 2021, President Abdel Fattah

El-Sisi issued Law no. 5 of 2021 amending a number of provisions of

Tax Real Estate Disposition Law.

The amendments stipulate that a tax of 2.5% is imposed (without

the ability for any further reduction), on the gross revenues

generated from the disposal of constructed real estate or land

prepared for construction within the cities’ boundaries,

whether the disposal commenced on the land as it exists in its

original state, or after constructing buildings thereon, and

whether the disposal is for the entire real estate, part of it, or

even a residential unit within the site. This also applies

regardless of the real estate’s purpose, whether the buildings

were constructed on land owned by the taxpayer or by third parties,

and whether the contracts for such disposals are publicized or


According to the law, the taxpayer is obligated to pay the tax

within 30 days from the date of disposal, otherwise, a fine shall

be imposed for the delay, which is calculated on the basis of the

credit and discount rate declared by the Central Bank of Egypt. It

should also be noted that the submission of a grievance or a

judicial appeal does not suspend the fine being payable.

Exceptions to this tax are:

  • Property offered as an in-kind share in the capital of

    shareholding companies, on the condition that the shares shall not

    be disposed of for five years;
  • Compulsory sales, whether administrative or judicial;
  • Disposition for public interest or improvement;
  • Disposition by donations or grants to the government, local

    authority units, public legal persons, or projects of public

  • Disposition of a will, donation, or gift to spouses,

    ascendants, or descendants;
  • Disposition of an heir of real estate transferred to him

    through inheritance before 26/7/2018;
  • Dispositions carried out by legal persons;
  • Disposition of buildings and land used for construction located

    in the villages and their neighborhoods, hamlets, and manors, in

    accordance with the law regulating the local administration

Please note however, the real estate investment activity has

particular accounting grounds when applying the taxes:

In case the taxpayer is a natural person engaged in the activity

of construction or purchase of real estate with the intention of

selling one or more times, the gained profit shall be subject to

income tax for natural persons as profits of commercial activity,

in accordance with the progressive tax brackets established in the

Income Tax Law. In such cases, the taxpayer should have the right

to offset any payments made for tax on real estate disposition

against his final tax due.

In case the taxpayer is a real estate investment company, the

profit of such company from the sale of real estate shall be

subject to corporate tax as taxable sales revenues.

Overall, these latest amendments clearly define the exempted and

non-exempted categories of real estate disposition activities and

set controls and penalties for non-compliance, taking into

consideration that tax collections represent the biggest source of

national income, and the government is putting great emphasis on

maximizing tax collection, in an effort to aid the country’s

commercial activities. 

The content of this article is intended to provide a general

guide to the subject matter. Specialist advice should be sought

about your specific circumstances.


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