Taxation in Egypt

All you need to know about taxation in Egypt for a European company / representative office:

1. Non-resident companies pay taxes only on income received in the territory of Egypt.
2. Some of the EU countries have agreements with Egypt on avoidance of double taxation, so it is possible to use foreign tax deductions if the European jurisdiction in which your company is registered has signed such agreement with Egypt.
3. It is necessary to keep accounting and submit tax returns certified by the local auditor. Reporting is submitted annually (before May 1 of each year, or 4 months after the end of the fiscal year).
4. In reporting, the company's losses can be set off in future periods for 5 years, the attribution of losses to previous periods for the company with your activities is not permitted.
5. Standard corporate income tax rate is 25%, if the net profit for 2014-2016. does not exceed 1 million Egyptian pounds; if this threshold is exceeded, an additional 5% of the tax is paid (temporary rule for 2014-2016); 1 USD = approx. 7.8 EGP.
6. Repatriation of dividends: tax on the repatriation of dividends is 10%. This tax may be reduced under the double taxation avoidance agreement, if it is signed (see paragraph 2). 
7. Interest on loans: payment of interest to a non-resident is subject to taxation at a rate of 20%. This tax can also be reduced under the double taxation agreement, if it is signed (see paragraph 2). Interest paid on a long-term loan (for a period of 3 years or more) will not be subject to the tax on repatriation.
8. Income received by a foreign shareholder (non-resident) from the sale of shares in an Egyptian company is taxed at a rate of 10%.
9. In the near future, the introduction of VAT is planned, which will replace the sales tax for most goods and services, but the exact date is not yet determined. At the moment there is the sales tax, the standard rate of which is 10-25%; a sales tax report is filed monthly; for this you need to register with the Egyptian Tax Administration as a payer of sales tax. However, if you have an import of goods (from Europe to Egypt), then the tax on imported goods is paid at the customs.
   For VAT and its correct presentation in the reporting, additional clarifying consultations with Egyptian accountants / auditors and lawyers are needed.
10. There is foreign exchange control in Egypt, as well as CFC rules (controlled foreign companies) and TC rules (transfer pricing) are applied.

Law & Trust International provides tax planning and optimization services. The lawyers of our company will provide advice on any issues related to tax planning and optimization in Egypt during personal conversation in the office, by phone or in chat.