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Whether you are a start-up venture, small to medium size enterprise, family business, Not-for-profit organization or international company looking for advice in Egypt
What is the current withholding tax rate in the jurisdiction applicable to:
- Interest
- Royalties
- Dividends
- Capital Gains
- Management/technical fees
- Other, please specify
A1 - Response
Current rate:
- 20%
- 20%
- 10% shall be reduced to 5% if the subject shares are listed in the Egyptian Stock Market.
- 10%
- 20%
20% on amounts paid abroad against services, artist and sportsman works
Does the territory have double taxation treaties in force?
A-2 Response
Yes, Egypt signed around 55 double tax treaties with other states.
A 3-Response
Most of them follow the OECD model; however there are other treaties followed the UN model.
A4 - Response
Yes; However, the domestic regulations restrict the direct application of tax treaties through the following procedures:
For services: The company paying the fees should submit an advance ruling along with specific documentation to the tax authority explaining transactions and the company’s tax treatment as per its understanding of the law and tax treaty.
As for royalties and interest: The payer shall apply pay and refund mechanism by deducting the law tax rate as per law (20%); then the beneficial owner should apply to the local tax authority in the territory to refund difference tax between the 20% and reduced tax rate as per the treaty.
A5 - Response
As per our communication with the key persons in the Egyptian tax authority ( ETA) the ETA has serious intention to amend some of the double tax treaties; however, it’s not officially published yet.
Does the territory have local rules/guidelines in respect of thin capitalisation?
A6 - Response
Yes , the Debit/equity ratio should not be more than 4:1 and interest paid in relation to exceeding interest shall not be deductible.
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