Egypt has revealed an new extensive tax guide that details the rights and responsibilities of investors, aiming to enhance their understanding of rights and tax obligations. This initiative is designed to reassure both current and prospective investors regarding their future tax responsibilities.
Rasha Abdel Aal, head of the Egyptian Tax Authority (ETA), reiterated the commitment of the Ministry of Finance and ETA to bolster communication with tax professionals, economic associations, and the business community. She highlighted that these groups are essential partners in the development of the tax system and the promotion of tax equity.
Expanded support units for better taxpayer assistance
Furthermore, the Investor Support Unit and the Advance Ruling Unit have been expanded to provide improved assistance to both new and existing taxpayers.
Abdel Aal explained that this initiative aligns with the ministry’s strategy to encourage open dialogue with taxpayers and experts, focusing on identifying challenges, offering practical solutions, and enhancing the investment climate. The authority also aims to provide more adaptable and efficient tax services while boosting tax awareness to promote voluntary compliance and minimize disputes. This coincides with Parliament’s endorsement of the first set of tax relief measures, heralding a new era of credibility, transparency, and equity while reinforcing trust and collaboration with the business sector.
Abdel Aal made these statements during a seminar hosted by the Scientific Association for Tax Legislation and the Egyptian Society for Political Economy, Statistics, and Legislation, in cooperation with ETA, to discuss and evaluate the newly introduced tax relief measures.
Details of the 20 provisions in the relief package
Abdel Aal noted that the package comprises 20 provisions, some of which necessitate legislative modifications while others require ministerial or administrative decisions. A significant approved measure is a simplified and incentivized tax system for small businesses, micro-enterprises, professionals, and entrepreneurs with annual revenues not exceeding EGP20 million. This system provides new incentives, including exemptions from past tax liabilities, stamp duty, development fees, and registration charges. Additionally, income tax will be capped at a maximum of 1.5 percent.
Major benefits of the new tax system
One of the major benefits of this system is that the first tax audit will occur only five years after enrollment, accompanied by a simplified annual income tax return, quarterly VAT filings, and an annual payroll tax return. Participants are also exempt from advance payments, profit distribution tax, and capital gains tax.
Easing taxpayer burdens with capped penalties
The tax relief package also concentrates on alleviating burdens on taxpayers by capping all tax penalties, ensuring they do not surpass 100 percent of the original tax owed. This measure seeks to eliminate excessive interest and late fees, preventing taxpayers from facing penalties due to delays in tax audits or prolonged disputes. Law No. 160 of 2024 has also been enacted, extending the validity of Law No. 79 of 2016 to effectively resolve outstanding tax disputes.
Simplified settlement mechanisms for tax disputes
Abdel Aal further added that a streamlined mechanism has been introduced to resolve pre-2020 tax disputes, particularly for cases assessed on an estimated basis. Taxpayers can now settle by paying a percentage of their declared tax liability or their last assessed tax amount without undergoing traditional audits. Those with proper financial records who have already been audited for pre-2020 tax periods can also request a settlement without incurring late fees or additional taxes, provided they pay the original tax owed within three months.
Provisions for late tax filings and amended returns
One notable provision allows taxpayers who missed their tax filing deadlines between 2020 and 2024 to submit their returns within a specified timeframe without facing legal penalties. Additionally, taxpayers can file amended returns for these years if corrections are needed, again without penalties.
Expansion of sample-based tax audits
Abdel Aal emphasized that the scope of sample-based tax audits has been broadened to encompass all taxpayers across tax centers, zones, and offices, commencing with the 2023 tax returns. To facilitate the process, required audit documents will be published in advance on the authority’s website, with only minimal additional documentation requested if necessary.
Implementation oversight to ensure effectiveness
El-Sayed Saqr, deputy head of the Egyptian Tax Authority, underscored the significance of establishing clear monitoring mechanisms to guarantee the effective application of the relief package. He indicated that multiple channels will be available for taxpayers to voice their concerns, ranging from contacting local tax office heads to directly reaching out to the authority’s leadership.
Formation of a committee to oversee tax relief measures
Saqr also announced the establishment of a high-level committee tasked with overseeing the implementation of the tax relief measures, supported by a 24/7 operations room. This team will address execution issues, quickly resolve challenges, and ensure that no barriers impede the ministry’s efforts to cultivate a transparent and equitable tax environment.
