قانون الضريبة على الدخل المصرى مترجم
Egyption Law no. 91 of 2005 Promulgating Income Tax Law
In the name of the people
President of the republic
The People’s assembly adopted the following law and we have issued it:
article (1):-
In respect of the income tax, the attached law shall be applied.
article (2):-
Income tax law promulgated by law no. 157 of 1981 shall be void, provided that, appeal committees formed according to the said income tax law shall continue until 31 December 2005 to consider the tax disputes relating to the years until the end of 2004 and thereafter the disputes remaining without settlement shall be referred to the committees formed according to the accompanying law.
Exemptions with fixed time in the said law shall remain effective with respect to persons whose exemption periods started before the effective date of this law until the expiration of such exemption periods.
Also item (1) of article (1) of law no.147 of 1984 for levying state resources development duty shall be void.
article (3):-
Articles 16, 17, 18, 19, 21, 22, 23, bis and 24, 25 and 26 of law of investment incentives and guarantees promulgated by law no. 8 of 1997 shall be cancelled.
Exemptions provided for in the said articles shall remain effective for companies & establishments whose exemption periods became effective before the enforcement of this law until the expiration of such exemption periods.
In order to enjoy exemptions stipulated in this law , companies and entities established in compliance with the said law and have not started exercising its activity or production until the enforcement date of this law , must start practising its activity or production within a period not exceeding three years from the effective date of this law
article (4):-
Each person shall be exempted from payment of all taxes due on his income as well as from all amounts of general sales tax for the taxation periods preceding the enforcement date of this law in addition to all amounts related to such taxes such as delay fine, additional tax and other, provided that the two following conditions are fulfilled:-
First: - the person should not have been previously registered or has presented tax return or has been subjected to any form of taxation audit by general tax authority or sales tax authority.
Second: - the tax payer presents his tax return for his income for the recent taxation period including full related data and to report to sales tax authority when reaches registration limit before lapse of one year as from the enforcement date of this law.
Exemption shall be ineffective if the tax payer doesn’t present regularly, his tax returns for his income for the following three taxation periods.
article (5):-
Litigation in all legal actions enrolled or being discussed at all degrees of courts before first of October, 2004 between taxation department and tax payers whose point of dispute is tax assessment, shall be terminated if taxable income ( subject of dispute) doesn’t exceed L.E.10000.
Unpaid taxes related to such actions shall not be claimed.
In all cases, the termination of the dispute shall not give the tax payer right to recover amounts paid by him on account of tax due on the disputed taxable income.
All the foregoing shall be applicable unless, the tax payer insisted on proceeding with litigation by submission of an application to the court considering the dispute during six months from the enforcement date of this law.
article (6):-
In cases other than those set forth in article 5 of this law , the tax payers in disputes with taxation department whether enrolled or being discussed at courts of various degrees before 1st October , 2004 may request resolving such disputes within one year as from the date putting such law into force , against payment of :
1- 10% of the tax due on the disputed taxable income if its value doesn’t exceed L.E.100.000
2- 25% of the tax due on the disputed taxable income for the amounts exceeding L.E.100.000 until L.E. 500.000 of taxable income after payment of the percentage stipulated in item (1) regarding the amounts not exceeding L.E 100 000 of this taxable income.
3- 40% of the tax and other amounts due on the disputed taxable income for amounts exceeding L.E.500.000 of this taxable income after payment of the two percentages stipulated in item (1 , 2 ) for amount exceeding L.E 500 000.
The tax payer shall be given discharge in respect of the disputed tax in case of his payment of the tax rates and other disputed amounts fixed as per the aforesaid items. And a resolution shall be issued for the termination of the dispute if the tax payer presented documents supporting payment.
In all cases, the termination of the dispute shall not give right to the tax payer to recover amount paid by him on account of disputed tax.
second book
tax on the income of natural persons
part one
article (7):-
As an exception to item (1) of article (52) of the accompanying law, the debit interests shall be deductible for loans and advances obtained by corporate bodies regarding the amounts above the quadruple average of equity without exceeding eight times of the same for the period starting from the taxation year 2005 until the end of the taxation year 2009 according to the following schedule:-
8:1 for the taxation year 2005
7:1 for the taxation year 2006
6:1 for the taxation year 2007
5:1 for the taxation year 2008
4:1 for the taxation year 2009
article (8):-
The minister of finance shall issue the executive regulation of this law and the accompanying law within a period of six months as from the date of publication in the official gazette and until such regulation is issued , the regulations and decisions applicable currently, shall remain effective without being contrary to the provisions of such two laws.
article (9):-
This law shall be published in the official gazette and effective as from the day following its publication date, with due regard to the following:-
1- The provisions of the accompanying law shall be applicable to salaries and its equivalent as from the first of the month following the date of its publication in the official gazette.
2- The provisions of the accompanying law shall be applicable to revenues of the commercial and industrial activity as well as revenues of non-commercial professions and revenues of the real estate wealth of natural persons starting from the taxation period 2005.
Such provisions shall also be applicable for the profits of corporate bodies as from taxation period 2005 or the taxation period for the corporate body starting after the effective date of this law.
This law shall be stamped by the state official seal and shall be made enforceable as other laws.
Hosni Mubarak
income tax law
Book 1
General provisions
Article (1):-
In application of the provisions of this law, the following terms & expressions shall have the meaning opposite thereto:
Tax: - income tax
Minister: - minister of finance.
Chairman of authority: - chairman of tax authority.
Taxpayer: - natural person or corporate body subject to tax according to provisions of this law.
Stock Corporation: - joint stock companies, partnership limited by shares and Limited Liability Company.
Partnerships: - companies limited by shares
Corporation de facto: - the company established between natural persons without the fulfillment of establishment procedures or notarization except in cases resulting from individual firms legacy.
Project: - economic entity practicing the original activity in Egypt or the permanent establishment in Egypt affiliated to economic entity abroad.
Related person: - every person related to the tax payer in a manner which affect the determination of the taxable income including:-
1- Husband and wife, ascendants and descendants.
2- Stock company and the person having directly or indirectly 50% at least of shares number or value or voting rights.
3- Partnerships: joint partners and dormant partners therein.
4- Any two companies or more where in each of them, other person has 50% at least of number or value of shares or voting rights in each of the two companies.
Neutral price: - the price of dealing between two or more unrelated persons which is fixed according to market forces and the dealing conditions.
Royalties :- amounts paid of whatever kind against use or right to use publication rights of any literature , art or scientific work including cinema films , any patent , trade mark , design , layout , plan or formula , or secret operation , against use , or right to use industrial or commercial or scientific equipment related to industrial or commercial or scientific experience.
Article (2):-
In application of this law, the natural person shall be considered as residing in Egypt in any of the following cases:-
1- If he has a permanent residence in Egypt.
2- If he resides in Egypt for a period exceeding 183 days either consecutive or interrupted during twelve months.
3- The Egyptian national who performs the duties of his job abroad and receives his income from the Egyptian treasury.
The corporate body shall be deemed as residing in Egypt in any of the following cases:-
1- If it has been established subject to Egyptian law.
2- If its head office or actual office is based in Egypt.
3- If it is a company wherein the state or any public corporate body owns more than 50% of its capital.
The executive regulation indicates the rules of determining permanent domicile and the actual head office.
Article (3):-
The income realized from a source in Egypt includes the following:-
(a) Income from services rendered in Egypt including salaries and the like.
(b) Income paid by an employer resident in Egypt, even if the work has been performed abroad.
(c) Income obtained by the sports man or the artist from activity in Egypt.
(d) Income from work performed by a party not residing in Egypt through a permanent establishment in Egypt.
(e) Income from disposals of movables belonging to a permanent establishment in Egypt.
(f) Income from exploitation or disposal of real estate and the like located in Egypt as well as other real estate annexed thereto by allocation.
(g) Dividends of Stock Corporation based in Egypt.
(h) Quotas of profits paid by partnerships resident in Egypt.
(i) Return paid by the government or municipal units or public corporate bodies or any other person resident in Egypt as well as the return paid by a permanent establishment in Egypt even if its owner is not residing in Egypt.
(j) Rentals, license charges and royalties paid by a person residing in Egypt or paid by a permanent establishment in Egypt even if its owner is not resident in Egypt.
(k) Income from any other activity performed in Egypt.
Article (4):-
The permanent establishment term , for the purpose of application of the present law , shall mean each constant place for carrying out all or some works of projects pertaining to a person not residing in Egypt , including by way of limitation:-
(A) place of management
(B) branch
(C) building used as sale outlet
(D) the office
(E) the factory
(F) workshop
(G) mine , oil field , gas well , quarry or any other place for extracting natural resources including wood or any other products from forests.
(H) Farm or plants.
(I) Building site, construction or assembly project equipment or related supervisory activities.
also any person works for affiliated project shall be considered as a permanent establishment as long as he is authorized to enter into contracts in the name of the project unless his activity is limited to purchasing of goods or commodities required for the project.
The following shall not be regarded as permanent establishment:-
1- Utilizing facilities for storage purpose as well as showing the goods owned by the project only.
2- Retaining stock of goods owned by the project for storage or showing purpose.
3- Keeping stock of goods and commodities owned by the project to be remanufactured by another project.
4- Having fixed place for an activity of purchasing goods or data collection for the project.
5- Having a fixed place for performing any preliminary or auxiliary works to the project.
6- Having a fixed place for practicing any of the said activities in the above mentioned items provided, the gross activity practiced through the fixed place should be on preliminary or auxiliary basis.
7- Industrial or commercial activities practiced by a foreign company through broker or general agent by commission or any other agent of independent nature unless it has been proved that such broker or agent has devoted his efforts during the taxation period for the interest of the foreign company.
The influence of non- residing company on another residing company doesn’t mean that the residing company is a permanent establishment of the other company.
Article (5):-
Taxation period is the fiscal year starts as from the first of January and ends on 31 December of each year or any period of twelve months taken as basis of calculating the tax.
Tax may be calculated for a period less than or exceeds twelve months and the executive regulation determines the accounting procedures.
Tax shall be payable on the day following taxation period and shall also be payable on the death of tax payer, discontinuance of his residence or wholly suspension of activity.
Book (2)
Income tax on natural persons
Part (1)
Scope of tax application & rates
Article (6):-
Annual tax shall be imposed on the total of the net income earned by natural resident and non- resident persons with respect to their income realized in Egypt.
The total net income is composed from the following sources:-
1- salaries and its equivalent
2- Commercial or industrial activity.
3- Professional or non-commercial activity.
4- Real estate wealth.
Article (7):-
Tax shall be applicable to amounts exceeding five thousand Egyptian pounds of the total net income achieved by the resident tax payer over a year.
Article (8):-
Tax rates shall be as follow:-
First tranch: above L.E 5000 until L.E 20000 10%
Second tranch: above L.E 20000 until L.E 40000 15%
Third tranch: above L.E 40000 20%
The annual total net income upon calculating tax shall be rounded to the lowest ten pounds.
Part (2)
Salaries and its equivalent
Article (9):-
Tax shall be applicable to salaries and its equivalent as follow:-
1- All amounts due to taxpayer as a result of working for other by or without a contract either regularly or irregularly whatsoever the names, forms or reasons for such dues, and whether such amounts have become due for works rendered in Egypt or abroad and its consideration has been paid by any party in Egypt including wages, remunerations, incentives, commissions, grants, overtime, allowances, quotas or shares in profits as well as cash and non cash benefits of whatsoever kind.
2- Amounts due to taxpayer from source outside Egypt for works performed in Egypt.
3- Salaries and remunerations of the chairmen and board members in public and public business sector companies who are not shareholders in such companies.
4- Salaries and remunerations of chairmen and board members in stock companies in consideration of their managerial activities.
The executive regulation of this law determines the basis of estimating the non-cash benefits.
Article (10):-
Revenues included in the taxable income for each part of the year wherein any taxable revenues have been obtained, shall be determined on this part of the year proportional to a year and on the basis of monthly revenues after being converted into annual revenues.
Should a change occur in the taxable revenues, the calculation of this revenues shall be amended as from the date of change on the basis of the new revenue or the old revenue whichever is lower after being converted into annual revenue.
A settlement shall be made annually according to procedures and rules set out in the executive regulation.
Accumulated salaries & wages and its equivalent which are paid in one payment in a year shall be distributed over years of maturity except for the financial consideration in lieu of leaves and the revenue included in the taxable income for each year, shall be recalculated and the accrued tax shall be settled on this basis.
Article (11):-
As an exception of article (8) of this law, tax shall be applicable to all amounts paid to non- residents whatever, the organization or authority employing such non- residents under its supervision, also, tax shall be applicable to amounts obtained by residents from parties other than their original employers at a rate of 10% without any reduction for meeting costs and without making any other discount.
In all cases, the tax should be withheld and remitted to the competent tax inspectorate within the first 15 days of each month according to the rules or procedures specified in the executive regulation of this law.
Article (12):-
The following shall not be subject to tax:-
1- pensions
2- End of service remunerations.
Article (13):-
Without prejudice to other tax exemptions prescribed by special laws, the following shall be exempted from tax:-
1- l.e. 4000 annual personal exemption for the taxpayer.
2- Social insurance subscriptions and other deductions required by social insurance law or any other alternative systems.
3- Contributions of employees to special insurance funds established in pursuance of special insurance funds law promulgated by law no.54 of 1975.
4- Life Insurance premiums of taxpayer and health insurance for his own favour or in favour of his wife or minor children, And any other pension insurance premiums.
5- Non cash collective benefits :-
A. Meals for employees.
B. Collective transportation of employees.
C. Medical care.
D. Work Tools & uniform.
E. Housing made available by employer, in connection of their work
6- Employees share in profits distributed as per law.
7- Members of diplomatic corps , consular corps , international organizations as well as other foreign diplomatic representatives in the course of their official work provided, reciprocity treatment and within its limits.
For the items (3) and (4), the total tax exempted amounts shall not exceed 15% of net revenues or L.E.3000 whichever is greater.
The same subscriptions and premiums from any other income stipulated in article (6) of this law may not be repeatedly exempted from tax.
Article (14):-
Employers and parties committed to pay taxable revenues including companies and projects established under free zone system shall have to retain an amount on account of tax from the tax amounts due from them as stipulated in article (9) of this law and to remit amounts withheld to the competent tax inspectorate within the first fifteen days of each month.
Employers and parties committed to pay revenues shall have to pay tax difference without prejudice to their right to claim the taxpayer for payment of his tax debts.
Article (15):-
The party responsible for withholding tax and remitting it according to art. (14) Of this law, shall be obligated to:-
1- Present quarterly tax return to the competent tax inspectorate in January, April, July and October of each year on the form prepared for this purpose.
2- Giving the employee a sheet upon his request to write therein his triple name, the amount and kind of income and the amount of tax withheld.
The executive regulation indicates the rules and procedures of executing the provision of this article.
Article (16):-
If the employer or the party committed to pay the taxable revenues is not residing in Egypt or doesn’t have a premises or establishment, the obligation to deliver the tax shall lie with the recipient entitled to taxable revenue according to rules and procedures stipulated in the executive regulation of this law.
Part (3)
Commercial and industrial activity
Article (17):-
Profits of commercial and industrial activity are determined on the basis of revenues resulting from all commercial; & industrial operations including profits resulting from sale of the company assets stipulated in items 1, 2, 4 of art (25) of the present law and profits recognized through compensations obtained by the taxpayer as a result of destruction or expropriation of any of such assets as well as profits realized within the taxation period after excluding deductible costs.
Net profits are determined on the basis of income statement prepared in accordance with Egyptian accounting standards and the taxable income is determined through the application of provisions of this law to the net profit referred to.
Article (18):-
A resolution shall be issued by the minister indicating the basis of tax accounting and (collection) procedures of tax due on profits of small scale firms without contradicting the provision of law of developing small scale firms promulgated by law no. (141) of 2004 and in agreement with the tolerable tax accounting of such firms.
Chapter (1)
Taxable revenues
Article (19):-
Tax shall apply to profits of the commercial and industrial activity including:-
1- Profits of commercial or industrial establishments, mines, quarries and oil.
2- Profits of craftsmen and small – scale activities.
3- Profits provided by any commercial or industrial activity even if it is limited to single transaction and the executive regulation of this law indicates the rules of considering the activity as single transaction for the application of this item .
4- Profits realized as a result of operation or operations carried out by brokers or agents with commission, in general , each profit realized by any person practicing brokerage for purchasing , selling or leasing real estate or any kind of goods , services or movable property .
5- Profits resulting from leasing commercial or industrial place whether lease included all or some of tangible or intangible components as well as profits resulting from hiring mechanical and electrical machinery except agricultural tractors , irrigation machines & its accessories , machinery & equipment used in agriculture.
6- Profits provided by all kinds of transportation activity.
7- Profits realized by practicing construction or purchasing real estate for their own account for regular sale whether profits resulted from selling the real estate property as a whole or divided into apartments, rooms, administrative or commercial units or other.
8- Profits from division of land for the purpose of disposal or building.
9- Profits from land reclamation or cultivation and projects of exploiting poultry breeding yards or their mechanical hatching , animal breeding yards , livestock yards and their fattening which exceed 20 heads as well as fisheries projects.
Article (20):-
Tax shall not apply to profits resulting from revaluation of the individual firm assets when submitted as non- cash share capital participation provided shares equivalent to non- cash shares are nominal and shall not be disposable unless after the expiration of five years.
Article (21):-
The net taxable profit of the firm shall be determined on the basis of all related long term contracts in light of progress of work of each contract during the taxation period. The progress of work of each contract shall be determined on the basis of actual cost of works carried out until the end of taxation period in proportion to total costs of the contract.
The profit estimated for the contract is determined as the difference between its value and estimated costs.
The profit estimated for the contract during each taxation period is determined at a percentage of the profit calculated as per the said paragraph, equivalent to works performed during the taxation period provided the profits of the contract shall be adjusted at the end of the taxation period wherein the contract has been fully executed on the basis of its actual revenues less actual costs after deducting profits previously estimated.
If the taxation period account during which the contract has been completed, closed at loss, such losses shall be deducted from the profits of the period or prior taxation periods during which the contract is determined to be completed without exceeding the profits of the contract during this period.
The tax shall be recalculated on this basis and the taxpayer shall refund overpayments.
If the resulting losses exceed the limits referred to in the preceding paragraph, the remaining losses shall be carried forward to the following years according to art. (29) Of this law.
In application of the provisions of this art., the long term contract shall mean manufacturing or processing or construction contract or the contract of providing related services and which are performed by the firm for the account of other against fixed amount and its performance takes more than one taxation period.
Chapter (2)
Taxable revenues
Article (22):-
The net profits of commercial and industrial profits shall be taxed on the basis of gross profits less total costs and expenses required for realizing such profits.
Deductible costs and expenses must fulfill the following:-
1- Costs & expenses should be related to the commercial or industrial activity and are required for practicing the activity.
2- Such costs & expenses must be actual and supported by documents save as, such costs and expenses that are not customarily supported by documents.
Article (23):-
The following shall be regarded as deductible costs & expenses:-
1- Returns of loans used in the activity of whatever amount after deduction of non-taxable credit returns or legally exempted.
2- Assets depreciation as stipulated in article (25) of the present law.
3- Dues and taxes incurred by the establishment except tax paid by the taxpayer as stipulated by this law.
4- Social insurance premiums incurred by the employer in favour of employees and for his own favour that are paid to public social insurance & pension organization.
5- Amounts withheld by the establishments every year from its money or profits for the account of special retirement or saving funds or other whether such funds have been established according to provision of law on special insurance funds no. 54 of 1975 or to law no.64 of 1980 related to alternative social insurance special funds or according to its system or special conditions or regulation.
The said amounts may not exceed 20% of the total wages & salaries of the employees provided the establishments should act according to a system having a regulation or special conditions stipulated therein that payments made by such establishments are equal to end of service remuneration or pension and the money of such funds should be separate from the money of the establishment and be invested for its own account.
6- Premiums of insurance policy concluded by the taxpayer for meeting disability, death or for the attainment of an amount or revenue, provided, the amount of premiums shall not exceed L.E.3000 per annum.
7- Donations paid to the government, municipalities and other corporate bodies of any amount whatsoever.
8- Donation and subsidies paid to charitable societies and Egyptian social institutions notarized according to laws organizing it as well as money offered to educational institutions and hospitals subject to the government supervision and Egyptian scientific research institutions provided such amounts don’t exceed 10% of the net annual profit of the taxpayer.
9- Financial penalties and compensations due from the taxpayer according to his contractual liability.
Article (24):-
The following shall not be regarded as deductible costs & expenses:-
1- Reserves and provisions of whatever kind.
2- Financial penalties imposed on the taxpayer as a result of committing criminal violation either by himself or by any of his employees.
3- Income tax due according to this law.
4- Interest paid on loans exceeding double of credit & discount rate declared by central bank of Egypt at the beginning of the calendar year ending taxation period.
5- Interests of loans and debts of whatever kind paid to corporate bodies who are not subject to tax or exempted therefrom.
Article (25):-
Depreciation of the establishment assets shall be calculated as follow:-
1- (5%) of the purchasing cost, construction, development or renovation or rebuilding of any of the buildings, establishments, fittings, ships and aircrafts for each taxation period.
2- (10%) of cost of purchasing , development , improvement or renovation or rebuilding of any of intangible assets purchased including good will for every taxation period .
3- The following two categories of assets shall be depreciated as per the depreciation rates indicated opposite thereto:
A. Computer, it programs and data storage systems 50% of the depreciation basis for each taxation year.
B. All other assets of the activity 25% of the depreciation basis for each taxation year.
4- No depreciation is calculated for land, artistic works, antiquities, jewelry and other assets that are not by nature subject to depreciation.
Article (26):-
Depreciation basis for the application of art (25) of the present law means the value of assets as per books as stated in the opening balance sheet covering taxation period , such basis increases by an amount equals to cost of assets used and cost of improvement or renovation or rebuilding during taxation period and such basis decreases by the equivalent to annual depreciation and the realizable value of assets disposed as well as the compensation amount obtained as a result of its loss or destruction of assets during the taxation period.
If depreciation basis has been negative, the disposal value of the asset or its compensation for loss shall be added to the commercial and industrial profits of the taxpayer but in case the depreciation basis doesn’t exceed L.E. 10000, the full depreciation basis shall be considered as deductible costs.
Article (27):-
30% shall be deducted from the cost of machinery & equipment used in the investment in production field whether new or used equipment, at the first taxation period of using such assets.
The depreciation basis stipulated in art. (25) Of this law shall be calculated for this period after deducting the 30% referred to.
In order to apply the two preceding paragraphs, the taxpayer should have regular books and accounts.
Article (28) -:-
Bad debts may be deducted if the taxpayer has removed it from his accounts and submitted report from a certified accountant that:-
1- The firm has regular accounts.
2- The debt is related to the firm.
3- The debt amount has previously been included in the firm accounts.
4- Taking serious procedures by the establishment without successful collection and 18 months expired after the maturity date.
The following shall be deemed as serious procedures for the collection of the debt:-
A- Attainment of payment order in cases where this procedure is allowed.
B- Issuance of a judgment by court of first instance by virtue of which the debtor becomes obligated to pay his debt.
C- Claiming the debt during the procedures taken for the enforcement of bankruptcy judgment of the debtor or his conclusion of a conciliation agreement to avoid bankruptcy.
If the debt has been collected in full or in part, the collected amounts should be included in the revenues of the firm in the year of collection.
Article (29):-
If the closing accounts of any year show a loss, then such loss shall be deducted from the profits of the year following thereto, if part of the loss still remains thereafter, it shall be carried forward yearly to the following years until the fifth year only and no losses shall be taken to the account of any other year thereafter.
Article (30):-
If the related persons have laid down conditions in their commercial or financial transactions that are different from those conditions agreed upon between non-related persons which may lead to reduce taxable income or transferring its burden from taxable person to another tax exempt person or to a person not subject to tax, then the tax authority shall determine the taxable profit on the basis of the neutral price.
The chairman of the tax authority shall have the right to sign agreements with related persons for the application of one method or another for determining the neutral price in its transactions.
The executive regulation of this law shall determine the method of determining the neutral price.
Chapter (3)
Exemptions
Article (31):-
The following shall be tax exempt:-
1- Profits of land reclamation or cultivation for a period of ten years as of the commencement date of practicing the activity.
2- Profits from poultry production, honey bees breeding, livestock breeding and fattening yards, fisheries projects and profits of fishing boats for a period of five years from practicing activity.
3- Outcome of transactions & dealings between the natural persons for their investments of securities listed in Egyptian stock of exchange and the losses resulting from such dealing may not be carried forward to the following years.
4- Money obtained by the natural persons from :-
- Interests of debentures and finance bonds of whatever kind that are listed in the Egyptian stock of exchange and issued by the government or stock companies.
- Dividends of joint stock companies and partnership limited by shares.
- Profits distributed for quotas in limited liability companies and partnerships as well as quotas of partners not participating in partnership limited by shares.
- Profits distribution of investment bonds issued by investment funds.
5- interests received by natural persons for deposits , saving accounts in banks accredited in A.R.E. , investment , saving and deposit certificates issued by such banks as well as interests of deposits & saving accounts in post office funds and interests on securities and deposit certificates issued by central bank of Egypt.
6- Profits recognized from new projects established by financing from social development fund within a percentage of such financing for five years from the date of practicing the activity or the staring date of production as the case may be and such exemption shall be applicable only to the person in whose name the loan has been executed.
Part (4)
Revenues of non- commercial professions
Chapter (1)
Taxable revenues
Article (32):-
1- Tax shall apply to net profits of free professions and other non-commercial professions practiced independently by the taxpayer in which work forms the basic element if resulted from practicing the profession or activity in Egypt.
2- Income received by owners of intellectual property from sale or exploitation of their rights.
3- Any revenues from any profession or activity not prescribed in article (6) of this law.
Chapter (2)
Determination of revenues included
In the taxable income
Article (33):-
Revenues entering in the taxable income every year are determined on the basis of net revenues during the previous year, revenues from non- commercial professions include proceeds from disposal of any professional assets as well as proceeds from know how transfer or waiving wholly or partially offices of practicing the profession and any amounts resulted from closing the office.
Net revenues are determined on the basis of revenues resulting from different operations as per the provisions of the present law after deduction of all costs and expenses required for practicing the profession including assets depreciation in compliance with simplified accounting principles by which ministerial decree is issued.
The following shall be deemed as deductible costs:-
1- Entry duties, annual subscription and charges of practicing the activity.
2- Taxes paid by the taxpayer in the course of practicing the profession except tax paid as per this law.
3- Amounts paid by the taxpayer to his syndicate according to its pension system.
4- Life insurance premiums and medical insurance premiums paid by the taxpayer for his own sake or his wife and minor age children.
In application of the items 3, 4 the total amounts of the net taxable income exempted shall not exceed l.e 3000 per year.
The same deduction may not be repeatedly effected from any other income stipulated in art. (6) Of this law
Article (34):-
Donations not exceeding the net annual revenues paid to government , municipality units , public corporate bodies or which are devolved to it , shall be deducted from net revenues stipulated in article (32) of this law , in addition to donations and subsidies paid to charitable societies and Egyptian non government organizations according to the provisions of law governing them as well as donations to educational institutions and hospitals subject to the government supervision and donations to Egyptian scientific institutions, provided , deductions don’t exceed 10% of the net annual revenues. Such donations may not be deducted repeatedly from any other revenues of those stipulated in article (6) of the present law.
Article (35):-
All costs and expenses required for revenues recognition shall be deducted from gross revenues of the taxpayer as per regular accounts supported by documents including costs and expenses that are not customarily supported by documents based on the executive regulation and deduction rate shall be 10% in absence of regular books.
In application of the provision of this chapter article 29 of this law shall be applicable if statutory books are maintained.
Chapter (3)
Exemption from tax
Article (36):-
The following shall be tax exempt:-
1- Educational institutions subject to supervision of the government or public corporate body or public sector or public business sector.
2- Revenues from writing and translation of books and literary, cultural scientific and religious articles except for revenues resulting from sale of the production of the written or translated articles in visual or audio form.
3- Revenues of teaching staff in universities and institutions and other from their written or compiled works printed specifically to be distributed among students according to the systems and prices laid down by universities & institutions.
4- Revenues of members of plastic artists association from their production of artistic works of photography, sculpture and craving.
5- Revenues of free professions people who are registered as active members, in professional syndicates in the field of their specializations, for a period of three years from the date of exercising the free profession.
They shall only be committed to settle the tax effective the first of the month next to the expiration of the term of the foregoing period of exemption, to which is added the training period as required by the law on the exercise of the profession, and the public service, military service, or reserve call up period, if it comes subsequent to the date of exercising the profession.
The period prescribed for tax exemption shall be reduced to one year for a person exercising the profession for the first time, if a period of more than fifteen years has passed since his graduation.
For the tax exemption to apply, he shall exercise the profession alone without participation by other party, unless that other party is tax exempt.
Part (5)
Revenues of real estate wealth.
Chapter (1)
Taxable revenues
Article (37):-
The taxable revenues shall include:-
1- Revenues of agricultural land.
2- Revenues of buildings
3- Revenues of furnished units.
4-
Chapter (2)
determining the revenues
entering in the taxable income
Article (38):-
1- The revenue of agricultural lands shall be determined on the basis of rental value taken as a basis for assessing the tax imposed according to the rules prescribed in law no.113 of the year 1939 concerning the tax on agricultural lands, after deduction of 30% for all costs and expenditures involved.
2- The revenues of agricultural exploitation of horticultural crops from productive fruit gardens ,for cultivated area exceeding three feddans ( acres ) , and area exceeding one feddan of ornamental , medicinal and aromatic plants if the cultivated area thereof exceeds one feddan ( acre ), as well as the nurseries of horticultural crops , whatever the cultivated area thereof unless the nurseries are established for the personal benefit of and for use by their owners, shall be determined on the ground of the equivalent rental value taken as a basis for assessing the tax imposed by virtue of law no.113 of the year 1939 referred to above concerning the tax on agricultural land , if the holder of the plants is a tenant .
But if the holder of the plants is the owner of the land himself, the revenues shall be determined on the basis of the double rental value referred to above.
Revenues a prescribed in item 1 of this article shall not enter in the taxable income.
In all cases, the equivalent of 20% shall be deducted from such revenues for covering for all costs and expenses involved.
A decree of the minister of finance shall be issued in agreement with the minister of agriculture, determining the ages of fruit trees following which these trees are considered productive, and indicating the types of horticultural crops.
The net taxable revenues shall be determined in the name of the owner of the plants and nursery stocks whether he is owner of the land or tenant farmer, any agreement or condition set to the contrary shall be considered by tax authority as null and void.
The taxpayer, his spouse, his minor children shall be considered as one owner of the plants and nursery stocks upon the application of the provision of this article, and the revenues shall be determined in his name, unless the ownership has devolved to the wife or the minor children from a source other than the husband, or the father, as the case may be.
The holder of the plants and cultivated nursery stocks , whether he is owner of the land or a tenant farmer thereof shall submit to the concerned taxation inspectorate statements of the cultivated areas , of each type of the fruit trees , within thirty days from the date the fruit trees becomes productive.
He shall also submit a statement of the areas cultivated with ornamental, medicinal and aromatic plants, or nurseries of the horticultural crops within sixty days from the beginning date of cultivation.
In case of removing the plants, the owner shall notify the concerned taxation inspectorate of the plants removal fact within thirty days from the date of its occurrence.
Article (39):-
Revenues from built real estate shall be determined based on the gross rental taken as a basis for assessing the tax on built real estate, as imposed by virtue of law no. 56 of the year 1954 concerning the tax on built real estate, after deducting 40% against all costs and expenses in addition to the rental value of the personal lodging in which the taxpayer lives together with his family.
Revenues resulting from determining the right of usufruct shall be treated same as the revenues resulting from property which are completely owned.
Tax shall be determined on the basis of the actual rental value less 50% against all costs & expenses for revenues resulting from leasing any real estate or part thereof under the provisions of civil code.
Article (40):-
The taxpayer may apply for the determination of the real estate wealth stipulated in art. (38) and the first paragraph of art. (39) Of this law on the basis of actual revenue provided his application must include all real estate of the taxpayer whether built or agricultural land.
The application should be submitted within the period fixed for submission the annual returns and the taxpayer should have statutory books in the manner to be indicated in the executive regulation.
Article (41):-
Tax shall be applicable to revenues resulting from leasing any furnished unit or part thereof whether it has been prepared for housing or practicing commercial or industrial activity or non- commercial profession or any other purpose.
The taxable revenue shall be fixed on the basis of the actual rental less 50% for all costs & expenses
Article (42):-
Tax rated 2.5% shall be imposed without any deduction on gross revenues resulting from disposal of built real estate or land located within the boundaries of the city whether disposal takes places before or after building thereon and whether the disposal included the whole of the real estate or part thereof or housing unit of it or other and whether the establishments are on land owned by the taxpayer or other.
As an exception from the disposals subject to this tax, the disposals by the successor of the real estate devolved thereto from the legator as it is upon succession as well submitting the real estate as a non – cash share capital participation in joint stock companies provided the equivalent share shall not be disposed of for a period of five years.
The notarization office shall have to notify tax authority of the notarized disposals that are subject to the present law within thirty days of notarization.
In application of this article, donation to ascendants, spouses or descendents or determination of usufruct of the real estate or leasing it for a period exceeding fifty years shall be subject to tax while forced sale whether administrative or judicial shall not be subject to tax and neither expropriation nor appropriation for public interest or improvement shall be subject to tax.
Also, donation to the government or municipal units or public corporate bodies or projects of public interest shall not be subject to tax.
Chapter 3
Exemption from tax
Article (43):-
The following shall be exempted from tax:-
1- Revenues from agricultural activity except for what has been stipulated in the present law.
2- Revenues of the cultivated areas of the desert land for ten years starting from the date of considering the land productive, a decree shall be issued by minister of finance in agreement with minister of agriculture for the guiding rules of the determination of the date of considering the land as productive.
Chapter (4)
Miscellaneous provisions
Article (44):-
Each owner of one built real estate or more or having agricultural land whose gross net revenues from rental value stipulated in item (1) of article (38) and clause (1) of art .(39) of the present law , exceed the exempted tranch Stipulated in article(7) shall have to submit a statement of all built real estate and agriculture land he owns and its rental value to any of the competent offices for collection of tax accrued thereon in which jurisdiction, the real estate and agricultural land are located.
The said statement shall be on the form specified in the executive regulation of this law.
Article (45):-
Tax payments made by the taxpayer in fulfillment of the original real estate taxes prescribed by law no. 113 of 1939 related to agricultural land as well as law no. 56 of 1954 concerning built real estate tax, shall be deducted from the tax due from him according to provisions of part (5) of book 2 of the present law without exceeding this tax.
Article (46):-
The provision of the two articles (38) and (39) of the present law doesn’t apply to agricultural land and built real estate included in the company assets.
Book 3
Tax on profits of corporate bodies
Part (1)
Scope of the tax application
Article (47):-
Annual Tax shall apply to net gross profits of corporate bodies irrespective of purpose thereof:-
Tax shall apply to:-
1- Corporate bodies residing in Egypt concerning all profits realized whether in Egypt or abroad with the exception of national service organization of ministry of Defense.
2- Corporate bodies not resident in Egypt with regards to profits realized through permanent establishment in Egypt.
Article (48):-
In application of article (47) of the present law, the following shall be corporate body:-
1- Stock companies and partnerships no matter the law they are subject to as well as companies, established between two natural persons without formalities or notarization ( corporation de facto ).
2- Cooperative societies and their unions taking into consideration exemptions prescribed thereto by law.
3- Public organizations and other public corporate bodies with regards to the taxable activity practiced without prejudice to exemptions prescribed by laws governing their establishment.
4- Foreign banks, companies and establishments even though its head office is abroad and branches in Egypt.
5- Units established by the municipal department with respect to taxable activity.
Article (49):-
The taxable income shall be rounded to the lower nearest L.E.10 (ten pounds) and shall be subject to tax rated 20% of the net annual profits.
As exception from the rate stipulated in the foregoing paragraph, profits of Suez canal authority and General Egyptian petroleum co., and central bank of Egypt, shall be subject to income tax at a rate of 40% and the profits of oil prospecting and producing companies shall be subject to tax rated 40.55%.
Article (50):-
The following are tax exempt:-
1- Ministries & Government departments.
2- Educational institutions subject to the supervision of the government or public corporate bodies or public sector or public business sector.
3- Non- government societies & firms established according to law of non- government societies and firms promulgated by law 84 of 2002 within the purpose of its establishment.
4- Non-profitable organizations practicing social, scientific, sports or cultural activities within the activity practiced not for commercial or industrial or professional purpose.
5- Profits of special insurance funds subject to law 54 of 1975.
6- International organizations and technical cooperation organizations and their representatives whose profits are exempted by virtue of international agreement.
7- Profits and dividends of investment funds established as per law of capital promulgated by law no. 95 of 1992 as well as the return of bonds listed in the stock of exchange.
8- Outcome of dealings obtained by resident corporate bodies from its investment in securities listed in the Egyptian stock of exchange without deduction of losses resulting from such dealings or carring them forward to the following years.
9- Interests obtained by corporate bodies for securities issued by central bank of Egypt or revenues resulting from such dealing as exception from art 56 of this law.
10- Dividends, profits and quotas obtained by resident corporate bodies against their capital participation in other resident corporate bodies.
11- Profits of land reclamation or cultivation for ten years from the commencement date of activity or from starting date of production as the case may be according to the executive regulation of this law.
12- Profits of poultry production companies honey bees, livestock breeding and fattening as well as fisheries for a period of ten years from the date of practicing the activity.
Part (2)
Determining taxable income
Article (51):-
Net taxable income shall be determined as per provisions applied to profits of the commercial and industrial activity provided for in part 3 of book (2) of the present law and in cases where no specific provision has been included in this chapter.
Article (52):-
The following shall not be considered deductible costs:-
1- debit royalties paid by corporate bodies stipulated in art. (47) Of this law on loans and advances obtained for amounts exceeding quadruple of the average equity as per financial statements prepared according to the Egyptian accounting standards.
This provision shall not apply to banks and insurance companies or companies practicing financing activity that are established by virtue of ministerial decree.
2- Amounts set aside for the formation of or feeding various provisions except the following :-
A. 80% of provisions for loans formed by banks in compliance with the rules of financial statements preparation and evalution principles issued by central bank of Egypt.
B. Technical provisions formed by insurance companies in application of insurance supervision & control law in Egypt promulgated by law no. 10 of 1981.
3- Dividends and the financial consideration paid to shareholders against attending the general assemblies.
4- Remunerations & allowances obtained by board chairmen and members.
5- Employees share in profits decided for distribution as per the law.
6- Other costs stipulated in article (24) of the present law
Article (53) :-
In case the legal form of a corporate body, revaluation profits or losses are not included in profits & losses account provided assets & liabilities are stated at their book value upon changing the legal form for the purpose of calculating the tax and to calculate depreciation of assets and carrying forward provisions & reserves as per the rules prescribed before making the change.
The following shall be considered as a change in the legal form:-
1- merger of two or more resident companies
2- division of a resident company to two or more resident companies
3- Conversion of a partnership to a stock company or conversion of a stock company to another stock company.
4- Purchase or acquisition of 50% or more of shares or voting rights regarding number or value in a resident company against shares in the purchasing company or the acquiring company.
5- Purchase or acquisition of 50% or more of the assets and liabilities of a resident company by another resident company against shares in the purchasing or the acquiring company.
6- Conversion of a corporate body into a stock company.
Article (54) :-
The foreign tax paid by a resident company for its profits achieved abroad shall be deducted from the tax due thereon according to this law provided the supporting documents must be made available.
The losses incurred abroad shall not be deducted from the taxable income in Egypt for the same taxation period or any other following period.
The deduction mentioned in the first paragraph must not exceed the tax payable in Egypt which could have been payable on the profits gained from works carried out abroad.
Article (55) :-
The provision of art. (29) Shall not apply to losses incurred by the company in the taxation period and prior periods if a change occurred in its ownership at a percentage exceeding 50% of shares or quotas or in voting rights, provided such change should be accompanied by a change in the activity.
In order for the preceding paragraph to be applicable to the joint stock companies and partnership limited by shares, the shares must not be offered for negotiation in the Egyptian stock of exchange
Book (4)
Withholding tax
Article (56):-
Amounts paid to non-residents in Egypt by owners of individual establishments, corporate bodies resident in Egypt, and by any non – resident entities having a permanent establishment in Egypt shall be taxable at a rate of 20% without deducting any costs from them.
These amounts shall comprise the following:-
1- Yields and interests;
2- Royalties except amounts paid abroad against design or know how for serving the industry. The minister, in agreement with the minister concerned with industry, shall determine the cases in which the know how is for serving the industry.
3- charges for services , the share of the permanent establishment operating in Egypt in the administrative expenses, and in the control and supervision expenses sustained by its head office abroad shall not be considered among the charges for services;
المزيد
