The Egyptian Association of Tax Experts has proposed three scenarios for the future of real estate tax on factories, which is set to expire at the end of this year. According to the association, the best scenario would be a permanent exemption for factories from real estate tax to encourage investment, reduce total production costs, and enhance the competitiveness of Egyptian products in external markets.
The industrial sector in Egypt faces significant challenges, including rising energy and raw material prices, and disruptions to supply chains due to geopolitical tensions and wars in the region. The sector provides 3.2 million direct job opportunities and contributes 17.1% to the country's GDP. The Egyptian government aims to increase this contribution to 20% of GDP and create 7 million direct job opportunities by 2030.
In 2022, the then-Finance Minister, Dr. Mohamed Maait, issued a decision to exempt 20 industrial activities from real estate tax for three years, ending in 2026. The Egyptian Association of Tax Experts suggests that the government has three scenarios to consider: a permanent exemption, an extension of the temporary exemption until 2030, or continuing the current real estate tax on factories.
The association's founder, Ashraf Abdel Ghani, emphasized that the industrial sector is a key driver of development and that it is essential to provide support and assistance to the sector. Abdel Ghani, who is also the secretary-general of the Economic Committee in the Senate, noted that a permanent exemption from real estate tax would allow factories to allocate resources to operational activities and expansions rather than tax burdens.
Abdel Ghani expressed concerns that if the government continues with the current real estate tax on factories after the temporary exemption expires, it could lead to a significant increase in tax values due to the five-year assessment process. This, in turn, could result in higher product prices and disruptions to investors' financial structures.
The association opposes the third scenario, which involves continuing the current real estate tax on factories, as it would not benefit factory owners and could have negative consequences for the economy. Factory owners do not benefit from increased land values, as their primary goal is to provide job opportunities for young people and meet local market needs.
The Egyptian Association of Tax Experts emphasizes that the industrial sector plays a vital role in the country's economy and that it is essential to provide support and incentives to encourage growth and investment. The association's proposals aim to stimulate investment, create job opportunities, and enhance the competitiveness of Egyptian products in global markets.
Key points
- The Egyptian Association of Tax Experts proposes three scenarios for the future of real estate tax on factories: a permanent exemption, an extension of the temporary exemption, or continuing the current tax.
- The industrial sector provides 3.2 million direct job opportunities and contributes 17.1% to Egypt's GDP.
- A permanent exemption from real estate tax could allow factories to allocate resources to operational activities and expansions rather than tax burdens.
