Egypt is a beautiful country located in the northeastern region of Africa. The country has a taxation system that is governed by the Egyptian Tax Authority (ETA). In this article, we will discuss how the taxation system works in Egypt, double taxation agreements, the main taxes expats need to be aware of, special tax breaks that could apply to expats, how and when to file a tax return as an expat, and tax exit procedures for anyone leaving Egypt to move abroad.
The Taxation System in Egypt
The taxation system in Egypt is a progressive system, meaning that the more you earn, the higher your tax rate will be. The tax year in Egypt runs from July 1st to June 30th, and taxes must be filed by the end of September of the following year.
There are several taxes that individuals and businesses in Egypt are required to pay. These include income tax, value-added tax (VAT), stamp duty, and real estate tax.
Double Taxation Agreements
Egypt has signed double taxation agreements with several countries, including the United States, Canada, and France. These agreements are designed to prevent individuals and companies from being taxed twice on the same income.
If you are an expat living in Egypt and your home country has signed a double taxation agreement with Egypt, you may be able to avoid being taxed twice on your income. However, it is important to check the terms of the specific agreement as they can vary between countries.
Main Taxes in Egypt
Income tax
All residents in Egypt are required to pay income tax on their worldwide income. The tax rates range from 0% to 22.5%, depending on income levels.
If you are a non-resident in Egypt, you will only be taxed on income earned within the country. The tax rate for non-residents is a flat rate of 22.5%.
Value-added tax (VAT)
The VAT rate in Egypt is currently 14%. This tax is applied to most goods and services, including imports.
Stamp duty
Stamp duty is levied on certain transactions, including property transfers, share transfers, and contracts. The rate of stamp duty varies depending on the transaction.
Real estate tax
Real estate tax is levied on the value of real estate property located in Egypt. The tax rate is 10% of the annual rental value of the property.
Special Tax Breaks
There are several special tax breaks that could apply to expats living in Egypt. These include:
Foreign tax credit
If you are a US citizen or resident alien living in Egypt, you may be eligible for the foreign tax credit. This credit allows you to offset your US tax liability by the amount of foreign tax paid on your foreign income.
Expat tax benefits
The Egyptian government offers several tax benefits to expats who live and work in the country. These benefits include exemption from income tax for the first six months of residency, exemption from VAT on the purchase of a new vehicle, and exemption from customs duties on household goods and personal effects.
Filing a Tax Return in Egypt
If you are an expat living in Egypt, you are required to file a tax return if you meet certain criteria. If you are a resident in Egypt and your income exceeds EGP 7,000 per year, you are required to file a tax return. If you are a non-resident and earn income within Egypt, you must also file a tax return.
The tax return must be filed annually by the end of September of the following year. The ETA provides an online platform where you can file your tax return, and it is recommended that you seek the assistance of a tax professional to ensure that you file correctly and take advantage of any applicable tax breaks.
Tax Exit Procedures for Egypt
If you are leaving Egypt to move abroad, you must complete a tax exit procedure with the ETA. This procedure involves filing a tax return for the year in which you leave, paying any outstanding taxes, and obtaining a certificate of tax compliance.
The certificate of tax compliance is required to obtain a residence permit or visa in another country. Failure to complete the tax exit procedure can result in a fine and other legal consequences.
Egypt has a taxation system that is similar to many other countries in the world. The tax system is progressive, and individuals and businesses are required to pay several taxes, including income tax, value-added tax, stamp duty, and real estate tax. Expats living in Egypt may be eligible for special tax breaks, and it is important to file a tax return correctly and complete the tax exit procedure if leaving the country. It is recommended that you seek the assistance of a tax professional to ensure that you comply with all tax regulations in Egypt.