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Egypt

Egypt

Tax amnesty for delay penalties and additional tax, amending rules concerning settlement of tax disputes and new withholding taxes rates

KPMG in Egypt provides an overview of significant changes to Egypt’s tax laws, including:

  • Tax amnesty for delay penalties and additional tax, and amending rules concerning settlement of tax disputes.                 
  • New withholding tax rates.

Tax amnesty for delay penalties and additional tax

The Egyptian parliament has issued a new law3 concerning the amnesty for delay fines and additional tax, and amended the law2, which renewed the law1 for the settlement of tax disputes. Highlights of the new updates are as follows:

  • The tax amnesty shall be applied on stamp tax4, income tax5, general sales tax6, income tax7, value added tax8, the state`s financial resources development duty law9 and fines imposed by customs authority.
  • The tax amnesty for the delay penalties and additional tax shall be applied on taxes and duties due or payable before the effective date of the new law provided that the taxpayer or responsible pays the complete amount of tax principle or duty as referred below:
  1. (90%) of delay penalties and additional tax, if paid within the first 90 days from the effective date of the law3.
  2. (70%) of delay penalties and additional tax, if paid within 45 days following the period stated in item (1).
  3. (50%) of delay penalties and additional tax, if paid within 45 days following the period stated in item (2).

However, the tax amnesty shall be (100%) of the unpaid delay penalties, if the taxpayer paid the complete amount of tax principle before the law3 came into force.

  • The provisions of the law1 shall apply on outstanding custom`s disputes which represented at courts of law or arbitration committees.

New withholding tax rates

According to Minister of Finance decree number 405 for the year 2018 which updated the Income Tax Law 91/2005 and its amendments, the rates that have to be withheld according to the article 59 of the aforementioned Law will be as the below table:

Category of activity Rate
Contracting and supplies except agricultural supplies provided to the government and public sector by the owners of the agricultural land limited to their planting  1%
Purchases 1%
Services 3%
Amounts paid by motor transportation services cooperative for its members against transportation services 1%
Commission and Brokerage 5%
Discounts, grants, commissions, exceptional and additional incentives given by tobacco, fertilizer and cement companies 5%
Discounts, grants and commissions given by oil, telecommunication, sanitary ware, electronics, clothes, food, detergents, paper industries and any other companies and establishments that apply withholding tax system 2%
The exporting subsidy given by export development fund for exporters 2%

1 Law No. 79 for the year 2016 on the Settlement of Tax Disputes, which was published in the Official Gazette on 26 September 2016 and came into force as of the date following its publication.
2 Law No.14 for the year 2018 on the Settlement of Tax Disputes, which was published in the Official Gazette on 27 February 2018 and came into force as of the date following its publication.
3 Law No.174 for the year 2018 on Amnesty for delay fines and additional tax, which was published in the Official Gazette on 14 August 2018 and came into force as of the date following its publication.
4 The stamp tax law as promulgated by law No. 111 of the year 1980.
5 The income tax law as promulgated by law No. 157 of the year 1981 which amended by law No.187 of the year 1993.
6 The general sales tax law as promulgated by law No. 11 of the year 1991.
7 The income tax law as promulgated by law No. 91 of the year 2005.
8 The value added tax law as promulgated by law No.67 of the year 2016.
9 The state`s financial resources development duty law as promulgated by law No. 147 of the year 1984.

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