Taxes are fees that are involuntarily levied on individuals or corporations and they are set enforced by a government entity, taxes are considered to be the major source of revenue for governments and governments use these taxes to fund the public works and finance their activities. Taxes are imposed through tax laws that are approved by the legislation and taken as a portion of the net income of the individual or the entity and in this report we will discuss the tax laws in Egypt.
Overview of taxes in Egypt
From 2011 Egypt has witnessed a lot of major changes, both politically and economically and tax laws was not an exception, several changes has been made and more changes are on the horizon
Taxes imposed on companies:
The corporate tax imposed by in Egypt are applicable to different types of companies including joint stock companies, limited liability companies, partnerships, banks and public companies.
Corporate taxes in Egypt are imposed on the taxable net revenue that a company achieves during the fiscal period, the taxable net income is named the tax base and this tax base is multiplied by the tax percentage, which is 22.5% in Egypt, in order to get the amount that the company should pay as corporate taxes.
In Egypt losses can be carried forward in later year up to 5 years, losses will be applied against future gains until the amount of loss is compensated, before imposing any taxes on these gains.
The withholding tax is an amount that is taken from the price and sent to the tax authority, withholding tax rates were adjusted in October 2018, the tax on services increased from 2% to 3%, while the tax on goods increased from 0.5% to 1%, while brokerage and consulting services have reached 5%
Taxes imposed on individuals
As the case in corporates, taxes are imposed on the income that individuals earn, and the major source of revenue for individuals is the salaries that they get from their jobs, the rates are determined according to the segment in which the taxpayer belongs, the first segment is lower than 8000 EGP and this segment is exempted from taxes, the second segment is between 8000 and 30000 EGP and the tax rate is 10%.
Taxes imposed on properties
The new law of property taxes in Egypt imposed taxes on properties whether it was inhabited or not, and whether it was rented or used by the owner, the property tax rate is calculated as 10% of the annual rental value of the property.
Treaties concerning the avoidance of double taxation
The double taxation is a condition in which an international tax base is taxed twice, a company that has multiple operations and subsidiaries worldwide can suffer from such problem, as it might find that its income has been taxed both in the subsidiary’s country and the parent company, Egypt is participating in several treaties in order to protect taxpayers from the negative effects of double taxation.