(AFP PHOTO)
President Abdel Fattah Al-Sisi agreed on a law to impose income taxes on both resident and non-resident Egyptians on their commercial, industrial and professional activities abroad, to encourage them to make Egypt “the centre of their activities”.
“We did not impose a tax on remittances earned by Egyptians living abroad, but we imposed a tax on business activities conducted abroad, by Egyptians who are based in Egypt, such as an Egyptian doctor who works for an Egyptian hospital but went abroad to perform a surgery,” according to a source from the Ministry of Finance who requested to remain anonymous.
According to the law, the income tax will apply to professionals such as accountants, doctors, engineers, and teachers who have earned income through providing services in Egypt and abroad, but whose main earnings come from work in Egypt. The tax will only apply to extra earnings.
The tax will also be imposed on all revenue generated by commercial and industrial transactions both within and outside Egypt, carried out by ordinary Egyptian citizens, as long as Egypt is the centre of their trade and industrial activity. This includes profits resulting from the sale of assets and the compensation paid to the taxpayer as a result of losing this property.
According to the law, taxes will also be applied to profits on liquidation after all tax deductive costs are taken into account.
In addition, owners of intellectual property rights will be taxed on the income resulting from their sale and management of this property in Egypt and abroad. In essence, any income resulting from any profession or activity whether within or outside of Egypt will be taxed, so long as the citizens’ primary professional and financial activities are carried out within the country.
Al-Sisi also issued a tax on capital gains for transactions on the stock market as well as cash dividends at a value of 10% of capital gains on the local stock market and on cash distributions, as well as profits resulting from investment in securities abroad or acting upon them.
The new law stipulates the imposition of a tax on dividends “whether these dividends be cash or bonus shares or in the form of bonds or incorporation shares or any other form.”
The tax applies to “capital gains realised by acting upon securities listed on the Egyptian stock market as well as capital gains from acting upon securities for Egyptian companies not listed on the Egyptian stock market regardless of whether or not the companies are registered abroad.”
“The tax shall be applied on profits gained from investment in financial securities abroad or acting upon them,” the law stipulates.
The new tax will be implemented the day following its publication in the state newspaper.
According to the law, the tax on capital gains amounts to 10% and will be reduced to 5% “if the percentage of the contribution to the subsidiary company accounts for 25% of capital or voting rights under the condition that the period of share ownership not exceed two years.”
