August 27, 2018

Amendments to Capital Gains Tax

A law was issued to amend Article 42 of the Income Law Tax No. 91 of 2005 (the "Law") regulating capital gains tax on real property.

For properties located in Egyptian cities, a flat rate of 2.5% of the gross proceeds is levied on sales or disposal of a real property or building land. No deductions are allowed.

The tax will apply on notarized or un-notarized sales. Transferring a real property by way of donation or will to a relative other than parents, espouses and siblings will be considered a taxable disposal. Also giving a usufruct right or a lease for more than 50 years is taxable.

Notary public offices, electricity and water companies as well as local municipalities are instructed to refrain from providing any services in relation to a real property until receiving an evidence that the capital gain tax on such property is paid.

That been said, the tax must be paid within 30 days from the sale or disposal, where the taxpayer will be held liable for any delay that will be calculated as of the second day of expiry of the specified duration.

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