Individual income tax is levied on the total net income of resident individuals on income earned in Egypt as well as on income earned outside Egypt. The income of non-resident individuals derived from sources in Egypt is also taxed.
Income tax is levied on a progressive scale:
This progressive taxation scale also applies to non-residents on income that they receive from the Egyptian treasury or for work done in Egypt.
Resident companies are taxed on worldwide income. Non-resident companies pay tax on profits derived from their permanent establishments in Egypt.
The corporate income tax rate in Egypt is 22,5% of the company's net taxable income. This rate applies to all activities, with the exception of oil companies, whose profits are taxed at a rate of 40,55%. In addition, the profits of the Suez Canal Authority, the Egyptian Petroleum Authority and the Central Bank of Egypt are taxed at 40%.
The standard rate of Value Added Tax / VAT is 14%. Also in some cases a reduced rate of 5% or even 0% can be applied. The standard rate applies to almost all goods and services, the reduced rate applies mainly to production equipment.
The VAT Act exempts a number of basic goods and services that affect low-income persons (in addition to other exceptions listed in the law). It also provides for a reverse charge mechanism whereby transactions involving non-residents providing services to Egyptian resident entities are subject to VAT in Egypt.
According to Ministry of Finance Decree No. 188 of March 26, 2020, taxpayers are required to issue their bills electronically in accordance with the technical and legal requirements issued by the head of the Egyptian Tax Authority (ETA).
A withholding tax of 10% is imposed on dividends paid by Egyptian companies to non-resident corporate shareholders on shares not listed on the Egyptian Exchange (Egyptian Exchange / EGX).
A flat rate of 5% withholding tax applies to dividends paid to non-resident corporate shareholders from shares listed on the EGX.
Interest on loans to private sector companies for more than 3 years is exempt from withholding tax, while loans for less than 3 years are subject to a 20% withholding tax.
Royalty payments are subject to a 20% withholding tax.
Payments for services are subject to withholding tax at the rate of 20%.
For all listed income from sources in Egypt, the applicable withholding tax rate may be reduced or eliminated altogether under the applicable Double Taxation Treaty (DTT).
Egypt does not currently impose specific rules for controlled foreign companies (CFCs).
Transfer pricing rules follow the arm's length principle, indicating that any transaction between related parties must be concluded on market terms (i.e., at market value).
The Egyptian IRS may adjust the prices of transactions between related parties if the transaction includes elements that would not be included in transactions between unrelated parties and whose purpose is to shift the tax burden to non-taxable entities. In this case, the tax authorities may determine taxable income on a price-neutral basis.
The property tax law takes into account various variables that can affect property values, such as location, the value of similar buildings and the economic situation of the area in which the property is located.
Property tax is levied annually on all constructed properties except schools, orphanages, charities and private homes with a market value of less than EGP 2 000 000. The tax also applies to land and buildings, with the exception of machinery and equipment.
The real estate tax rate is 10% of the value of the real estate (the calculation of the value of the real estate will be different for residential and non-residential properties).
Social contributions.
Egypt has begun implementing a new comprehensive health insurance system starting in 2019. The law on the new health insurance system came into force on July 12, 2018. The new system consists of 6 phases and will be implemented over 15 years. Each phase will cover 5 provinces simultaneously, with the provinces of Cairo and Giza, among others, to be included in the new system in the final implementation phase. The new health insurance system is to be financed from several sources, among which:
Individuals wishing to take advantage of the new health insurance system will have to pay a subscription fee (so-called subscription) depending on the category to which they belong:
Egypt has 61 Double Tax Treaties (DTC) with the following jurisdictions:
61 DTCS: Albania, Algeria, Austria, Bahrain, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Denmark, Ethiopia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iraq, Ireland, Italy, Japan, Jordan, Korea, Kuwait, Lebanon, Libya, Macedonia, Malaysia, Malta, Mauritius, Montenegro, Morocco, Netherlands, Norway, Oman, Pakistan, Palestine, Poland, Romania, Russia, Spain, Saudi Arabia, Serbia, Singapore, South Africa, Sudan, Sweden, Switzerland, Syria, Tunisia, Turkey, UAE, Ukraine, United Kingdom, United States, Uzbekistan, Yemen.
In addition, Egypt has signed and ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI entered into force for Egypt on January 1, 2021.
There are no currency controls.
Taxpayers are obliged to calculate and file their income tax return for each fiscal year.
Income tax returns must be filed within 4 months after the end of the fiscal year; therefore, if a company's fiscal year ends on December 31, tax returns must be filed by the end of April of the following year.
Other returns, such as the VAT return, are filed monthly.