Egypt: Taxes and Costs

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Low income tax, no other taxes

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	10.0%	10.0%	10.0%
Click here to see a worked example
Source: Disclaimer

RENTAL INCOME TAX

Furnished rentals

Under Income Tax Law 187 – which distinguishes five categories of individual income - the first three categories - furnished real estate, commercial and noncommercial activities - are pooled for the purpose of personal income assessment.

Income tax is levied at progressive rates:

The taxable income is 50% of the gross rent, the other 50% being allowable deductions as income-generating expenses.

Unfurnished rentals

Income from unfurnished properties is taxed differently from furnished properties in Egypt.

Under the Law for Unfurnished Property No 9 for the year 1997, if income is derived from renting unfurnished apartments, rental income can effective be tax-free. There are two reasons for this:

1. The rental income on unfurnished property should be declared at the ‘assessed’ value under the Real Estate Tax Schedules. In theory, the government should renew these schedules every 10 years, but hasn’t. So assessed rental values are very low; for example, the assessed value on a rental of EGP1,000 (US$172) might be only EGP100 (US$17).
2. There is no requirement that individuals should file their income from unfurnished properties for tax. This is a sort of gap in the law, which is widely taken advantage of.

Tax on unfurnished property income is payable only when (Egyptian) salary tax is declared. If people live abroad salary tax is almost never declared, since they are not earning an Egyptian salary, and in any case it would too complicated to achieve - so they do not pay tax on their income from unfurnished property in Egypt.

Most locally-resident Egyptians who let unfurnished property in practice also do not declare their unfurnished rental income, even though they declare salary tax.

If a property owner rents unfurnished property, especially to a foreigner, he must show the local police station a copy of his tenant’s passport. But the tax registry and the police registries are not synchronized.

Corporate Route

Some company-lessees will deduct 1% to 3% from the rent that they pay to landlords, in fulfillment of their duty in regard to the landlord’s tax-obligations. They will open an account at the tax office in the landlord’s name, and give the landlord an invoice. Since the law does not say that the landlord has to file for tax, the Inland Revenue takes the 1% to 3%, but, since they don’t have a file on the landlord, they do not investigate further.

Company-lets are entered into on an unfurnished basis, even if furnishing is in fact provided. Furnishing and inventory issues are not mentioned in the main contract, but are the subject of a separate rental-of-furniture contract.

Capital Gains

There is no capital gains tax in Egypt.

A flat rate of 2.5% of the gross proceeds is levied on sales of real estate or building sites, within the boundaries of Egyptian cities.

Egypt - more data and information

• Guide to buying houses and registering property sales in Egypt

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