KPMG in Egypt summarizes recent tax developments that aim to attract foreign investment to the country. These include a change to the taxation of unrealized foreign exchange gains and losses, suspension of the capital tax, new prescribed forms for transfer pricing, and upcoming income tax rate changes.
Under recent tax law changes, an unrealized foreign exchange loss would be disallowed for income tax purposes and subject to income tax, while the unrealized gain would be deductible for income tax purposes.
Media reports1 have indicated that the capital gains tax, introduced last year, is on hold for two years. However, no formal guidance has been issued to date.
Egypt’s tax authority has issued transfer pricing forms, which taxpayers must complete and attach to their annual income tax forms.
Egypt’s Ministry of Finance announced that the top income tax rate would be reduced to be 22.5 percent instead of 25 percent. The additional tax of 5 percent on high incomes, which brings Egypt’s top rate to 30 percent, would also be repealed. However, it is not clear when the law will be issued to confirm these changes.
1 See, for example, “Cairo suspends capital gains tax after investor disquiet,” Financial Times, May 18, 2015.