Thursday 21 Nov
Dr. John Saad Ibrahim, a tax expert, has disclosed that the Egyptian Tax Authority, under the Ministry of Finance, has issued a circular clarifying that buyers are responsible for paying any real estate tax when purchasing new units.
Saad noted that the decision
included a warning from the authority to consider several key points. Notably,
the real estate transfer tax is governed by the income tax law and applies only
to individual transactions by natural persons.
Furthermore, the decision
confirmed that the real estate transfer tax does not apply to transactions
carried out by natural persons if they engage in multiple transactions
professionally. In such cases, they are subject to income tax.
Additionally, the tax does not
apply to legal entities, such as companies, regardless of their legal
jurisdiction, that engage in real estate investment activities.
Saad highlighted that the
decision confirmed the buyer's liability for the real estate transfer tax, not
the seller. Any agreement to the contrary is considered a violation of the law.
The authority issued this circular in response to its observations of some taxpayers, both individuals and companies involved in real estate investment, including a clause in their unit sale contracts stating that the buyer is responsible for the real estate transfer tax on the contracted unit. These taxpayers were then collecting these amounts from buyers under the guise of the real estate transfer tax.
