The Minister of Finance issued the Circular No. 3244 /S1 dated November 29, 2019, published in the Official Gazette No 52 on 7/11/2019, referring to the previous Circular No. 125 /S1 dated 01/02/1997 under Law No. 366 dated 01/08/1994 which was applied as from the beginning of 1993 and has on the one hand, considered that the built property tax is linked to effective beneficiary of the revenues which may be either the owner or the investor or alike or any person representing the aforementioned persons; and, on the other hand, has imposed a tax at a progressive rate on each and every property the taxpayer owns or invests within the same governorate Mohafaza) .
In this respect, it should be noted that the principal proportional tax on the real estate under the Law No. 366 dated 01/08/1994 at a fixed rate of 4% of the income derived by the real estate was abolished by the Law No.583 dated 23/04/2004 that has applied a unique progressive tax, ranging from 4% up to 14% of the real estate’s revenues, on each real estate separately.
On the other hand, the taxation of different units (of the buyer) by virtue of sales agreements in the non-divided building should not be due on the basis of the revenues’ brackets of each unit but is related to the whole real estate’s revenues and not on the revenues generated by each unit separately.
The Circular has as well reminded that penalty of collection and penalties of recovery were due in connection with the preceding issues in addition to the due taxes. In this regard, it would be legally impossible to divide the taxes due on the entire non divided property as well as the penalties, on the units of said property. Therefore, it was very important to be very precise, cautious, and accurate in determining the beneficial owners of the revenues of the non-divided properties and the different units of the divided buildings, especially since the reality has shown the possibility of a long period separating the tax’s date of entry into force and the date of final registration of said real estate in the name of the buyers in the certificate of the land register.
Consequently, the financial departments in charge of the built property tax have been required by virtue of the Circular to comply with the following:
- To reject requests for taxation of the buyer of the undivided or divided building’s units of any kind whatsoever by virtue of a provisionary measure, regardless of the document attached to the request and even though submitted by error in breach of the foregoing; provided that the buyers whose applications for taxation were accepted shall remain taxable.
- The buyer of all the entire undivided properties and the various units in the divided buildings into units for which title deeds have been issued shall be taxable upon the owner’s request provided to comply with the following:
- The buyer’s request for taxation (Form K10) should be submitted by the principal owner or by one of the principal owners or by any person representing the said persons or by the legal representatives, to which should be attached a copy of the notarized sale agreement for which the fiscal stamp has been duly paid or the irrevocable proxy which shall include a recognition of the real payment of the full price as well as a copy of the title deed or a copy of the cadastral attestation.
- The previous years’ taxation shall be corrected, considering that the tax is vitiated by a material error for a non-due tax.
- The primary owner whose name is registered on page of the land register should continue to guarantee the payment of taxes and penalties in case the buyer refuses to pay.