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Major Taxes in Egypt:

TYPE OF TAX
Corporate Tax Rate 20% 40% for Central Bank, Suez Canal and general Authority for Petroleum 40.55% for Oil Exploration and production companies

EGYPT

Surtax/ Surcharge

No

Withholding Tax Rates

On Payments to Non-Residents: Subject to lower by Tax treaty Dividend:Nil Interest: 1. 20% on gross interest amount. 2. 32% on gross interest amount on government bonds issued by Ministry of Finance on behalf of Central Bank/ Other Banks. May offset against final tax liability. Royalty: 20%. However, Withholding Tax Exempted in case of Royalty paid with regard to industry design or know-how and approved by ministry of finance and ministry of industry. Branch Profit: Nil Services Fee: 20% Excluding services like transport, insurance, training, participation in exhibitions and conferences, listing on international stock exchanges, advertisement and direct marketing and payments by a foreign subsidiary to its headquarters abroad in return for administrative support, supervision and control (management fee). On Payments to Residents: Withholding tax in certain categories only 1. 32% on interest on government bonds issued by Ministry of Finance on behalf of Central Bank/ Other Banks. May offset against final tax liability. 2. 20% on brokerage fees provided payment is not related to main business. 3. This is final withholding tax and Recipient do not require to report such income in its taxable base.

Alternative Minimum Tax (AMT)

No

Net Wealth Tax

No

Real estate tax

10% on annual rental value of real estate property. A deduction of 32% is available for real estate properties used for non-residential purposes (on rental value + maintenance cost).

Initial Fee and Registration Charges

Details not available.

Inheritance & Gift tax

No.

GST/ VAT

GST Standard Rate of 10%. The manufacturers and services providers with turnover in excess of EGP 54,000 must register for GST purposes. Wholesalers and retailers are also required to register for GST where turnover exceeds EGP 1,50,000. GST Reduced Rate of 5% applied to coffee, imported fine flour, soap & detergents, fertilizers, insecticides, gypsum and wood, services rendered by artists' agents, Fax/Telex services, locally produced medicines. GST Increased Rate of 15%/ 20%/ 30% applies to different categories specified.

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TYPE OF TAX

EGYPT
Certain Exemptions are also available like imported goods & services required for licensed activities within the free zones, cities and markets. Companies which are not resident & no permanent establishment in Egypt but carry out taxable transactions in Egypt will be subject to GST.

Capital Duty

No

Excise Duty

No

Transfer Tax

2.5% duty on the transfer proceeds in case of immovable property transfer.

Stamp Duty

Stamp duty is levied on all contracts, agreements and the execution of documents, a range of bank transactions, dealers' licences and insurance policies. Registration of a company in the Coomercial Register and Renewals: EGP 180 Registration of an agent or commercial representative of a foreign company working in Egypt: EGP 900 Insurance: 1-10% Banking Transitions: 0.04% Commercial Advertisements: 15% Opening Letter of Credits: 1% of Value of part not covered by cash Loans: 0.2% borne equally by bank and client and paid by bank

Custom Duty

2% import duty on raw materials and primary foodstuffs 5% import duty on Capital Good 12% import duty on Intermediate Goods 22% import duty on Non-durable Consumer Goods 32% import duty on Semi-durable Consumer Goods 40% import duty on Durable Consumer Goods

Special Tax Related to Hydrocarbon Activities

Annual Surface Rent + Royalty on Extracted Oil

Development Levy

EGP 25/ Tonne on clay used by Cement Industry

Dividend

Dividend received from a resident company is not taxable. Dividend received from a Non-resident company is treated as ordinary business profit and subject to corporate tax rate. A deduction allowed for foreign taxes paid abroad up to the amount of tax payable in Egypt.

TAX BASE

Resident companies are subject to corporate income tax on their worldwide income. Nonresident companies are subject to the tax only on Egyptian-source income.

Capital Gain

1. Gain arising from the disposal of capital assets are treated as ordinary business profit and are taxable at the standard rate. 2. No Tax if capital gain is derived from securities listed on Egyptian Stock Exchange.

Losses:
For Capital Loss

Capital Losses may be treated as ordinary losses. Capital Losses may be offset against current or future business profits.

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TYPE OF TAX
Other than Capital Loss

EGYPT
Net Operating Losses may be carried forward for 5 years. No carryback of losses is permitted.

Unilateral Double Taxation Relief

Yes. A tax credit is granted under domestic tax law in respect of foreign tax paid. The foreign tax credit may not exceed the corporate income tax due in Egypt. This is subject to tax treaty.

Participation Relief

Inbound/ Outbound Dividend: No

Group Treatment

No. Groups may not elect to be taxed on a consolidated basis or to transfer losses among their members.

Incentives

1. Free Zones: Projects established in free zones are entitled to a lifetime exemption (excluding production of fertilizers/ iron and steel/ petrochemicals industry/ liquefaction and transport of natural gas). These projects are outside the scope of income tax. However, annual fee levied as:
-1% of the value of goods entering the free zone with respect to storage projects -1% of the value added to products with respect to manufacturing and assembly projects -1% of annual revenues with respect to services projects

2. Assets Acquisition: A deduction of 30% of the cost of plant, equipment and machinery used in the production process for Deduction Expenses is allowed in the first year of industrial production. 3. Special treatment of provision is granted to banks and insurance companies regarding deduction of provisions for corporate income tax purposes. 4. Profits of Investment funds are subject to exempted from tax

Anti-avoidance

1. Transfer Pricing: Taxpayers are required to comply with arm's length standard in Related Party Transactions. Methods to determine the transfer pricing:
- Comparative Uncontrolled Price (CUP) Method - Total Cost Plus Method - Resale Price Method (priority given)

2. Thin Capitalisation: 4:1 Debt-to-Equity ratio applicable. Any interest exceeding this ratio is nondeductible. 3. Controlled Foreign Company(CFC): Egyptian Company is required to corporate tax on its CFC's income if the following conditions are satisfied: - CFC income is not subject to tax or exempt from tax in the country where the foreign company is located, or the corporate tax rate in that country does not exceed 75% of the tax rate applied in Egypt. -Participation in the CFC's share capital exceeds 10% - More Than 70% of the CFC income consists of Dividend, Interest, Royalties, Management Fees and Rental Payments 4. Disclosure Requirements: No

Main Business Entities

Joint Stock Company Partnership Limited by Shares Limited Liability Company Unincorporated Business- Limited PartnershipBranch, Subsidiaries, JV and representative office of a Foreign Company

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