Corporate tax is imposed on the annual taxable net profit.
|Corporate Income Tax||StampTax|
|Salary Tax||Sales Tax|
|Withholding Tax on Domestic Transaction||Property Tax|
|Withholding Tax on Cross-border
1. Corporate Income Tax:
Corporate tax is imposed on the annual taxable net profit. The
taxable net profit is determined based on the net profit of audited financial
reports after making certain adjustments as per the income tax law. Taxpayers
are required to file annual corporate income tax returns that should be signed
by a local external tax advisor. Tax returns under Egyptian tax law are a
self-assessment. Accordingly, any understatement of tax liabilities in the tax
return may result in the imposition of penalties.
The Egyptian corporate income tax rate, as at 2015 is 22.5 percent on net taxable income.
Tax losses can be carried forward for a maximum of five years.
A serial of tax law amendments was issued in 2013–15; these amendments on the corporate tax were primarily related to capital gains and profit distributions.
2. Salary Tax
Under Egyptian Tax Law, it is the employer’s responsibility to withhold the salary tax due on each employee and remit the tax
to the Tax Authority on a monthly basis within fifteen days following the month of payment.
Nonresident employees are subject to the same salary tax rules; however, if they are residents of a country that has a tax treaty with Egypt, then tax treaty provisions should apply.
3. Withholding Tax on Domestic Transactions:
The withholding tax would apply to payments in excess of EGP300.
The rates as at 2005 are 2 percent on services; 0.5 percent on supplies and contracting activities; and 5 percent on commissions and brokerage fees.
Entities that are required to withhold tax under the existing tax law need to apply the above rules to file a quarterly withholding tax form within one month, following the end of each quarter, and remit the tax along with the tax form.
4. Withholding Tax on Cross-border Transactions:
As at 2009 a withholding tax of 20 percent is imposed on the
following payments made to overseas parties by resident sole proprietorships,
partnerships and companies:
However, the tax treaty provisions may apply. Meanwhile, the treaty country resident recipient may apply for a tax refund for the difference between local rate and the treaty rate from the tax authority, after providing the necessary documents and following the procedures.
5. Stamp Tax:
Stamp tax law classifies the stamp taxes into physical and proportional taxes. The physical stamp taxes are imposed on a variety of documents such as contracts. The proportional stamp taxes are imposed on the values of certain transactions, e.g. advertisements at a tax rate of 20 percent.
The government of Egypt has released the VAT Law on 7 September 2016 and enacted it as of the following day of being published in the official Gazette i.e. on 8 September 2016. VAT is to be levied on all commodities and services including the local or imported commodities and services listed in the table attached to the tax law in all its circulated stages.
1. Review the monthly VAT Returns prepared by the company in accordance to the provisions of the VAT Law No. 67 for the year 2016 and the filing date to the Tax Authority.
2. Review the VAT rates applied on each product /service sold by the company in accordance to the provisions of the VAT Law.
3. Comparing the related monthly GL accounts with the numbers which are included in the monthly VAT returns.
4. Review samples of the sales invoices booked in the accounts with the sales GL and outputs VAT GL in order to identify any differences that may arise.
5. Review samples of the sales invoices to confirm the correct booking of the outputs VAT (VAT on sales) compared to the sales GL accounts.
6. Review samples of the purchase invoices booked in the accounts with the purchase GL and inputs VAT GL in order to identify any differences that may arise.
7. Review samples of the purchases invoices to confirm the correct recording of the inputs VAT (VAT on purchases) compared to the purchases GL accounts.
8. Review samples of the inputs VAT paid on purchases to determine whether any cost or expense may subject to VAT under the reverse charge mechanism.
9. Review the exemptions on exports- if any.
7. Property Tax:
Property tax is imposed on all buildings in Egypt. Tax is borne by the owner, either a person or a corporate body.
As at 2008 The tax rate is 10 percent on the annual rental value of the taxable buildings after the deduction of 32 percent (30 percent for residential units) allowed for maintenance.
The tax is due from 1 July 2013, and needs to be collected in two equal instalments (at the end of June and the end of December in the same year).
Taxpayers are required to file a tax return; failure to do so will result in a penalty for the taxpayer.
8. Social Insurance:
According to the social insurance law, there are two kinds of social insurance, as follows:
(a) Standard social
insurance Legal entities working in Egypt should register for social insurance with the competent social insurance office.
Social insurance on the employee salary is imposed on both the employee and the employer. As at 1985 the employer’s share of social insurance is 26 percent of the basic salary and 24 percent of variable salary; in contrast, the employee’s share of social insurance is 14 percent of the basic salary and 11 percent of the variable salary.
The employer is obliged to remit these monthly contributions to the competent social insurance office before the 15th of the following month to avoid the delay interest of approximately 1 percent per month.
(b) Contacting social insurance
Contractors working in Egypt should notify the social insurance authority with its contracts and pay the related social insurance contributions due on these contracts.
The contributions due will be determined according to the total value of the contract and the nature of work; there are rates specified for most types of work.
Dedicated partners to assist you:
|Mohamed Alaam||Mohamed Mostafa|
|Maged El Meniawy||Saleh Rewaished|
Our Taxation Services include:
Providing practical tax compliance services (including corporate tax, salary tax, stamp duty tax, withholding tax, sales tax and property tax) to help our clients comply, manage risk, increase efficiency and unlock the value of their
Tax consulting to help clients build and operate leading tax functions and manage their tax risk, reputation and compliance in a market that is increasingly regulated.
Tax due diligence to identify the tax exposure of a deal and how it may be mitigated, with a clear focus on risk assessment.
Assisting organisations entering new markets or undergoing corporate transactions, such as restructuring, mergers and acquisitions