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Reports

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Egypt: How to raise revenues by lowering fees

Author: Jamal Ibrahim Haidar
Publication: Celebrating Reforms 2008
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Overview

Over the last decade, Egypt’s economy grew rapidly. But its property market remained far below its economic potential—for government revenues and as an investment vehicle for citizens. In fact, as recently as 2005, 90% of properties in Egypt were either unregistered or registered at underestimated values. Transferring a property between domestic companies cost 5.9% of property value. Compare that with less than 0.5% in New York. Egypt’s property-registration fee structure (based on a percentage of the property value) encouraged undervaluation, complicated registration, and required more regulation to secure tax revenues. It also created opportunities for corruption.

Reform in 2006 helped Egypt cut registration fees from 5.9% to just 1% of property value with fee caps. Meanwhile, state revenues rose—along with the country’s Doing Business ranking. This case study tracks the process.

Main Findings

  • Egypt’s total property registration fees decreased from 5.9% of property value to just 1% of property value.
  • Compared to 6 months previous to the reform, revenues from title registrations rose 39% just 6 months after the reform.