{"id":593755,"date":"2019-10-09T04:00:53","date_gmt":"2019-10-09T04:00:53","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2019\/10\/09\/finmin-federation-of-egyptian-industries-committee-finalize-new-income-tax-act\/"},"modified":"2019-10-09T04:00:53","modified_gmt":"2019-10-09T04:00:53","slug":"finmin-federation-of-egyptian-industries-committee-finalize-new-income-tax-act","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2019\/10\/09\/finmin-federation-of-egyptian-industries-committee-finalize-new-income-tax-act\/","title":{"rendered":"FinMin, Federation of Egyptian Industries committee finalize new Income Tax Act"},"content":{"rendered":"

<\/a> EXCLUSIVE- FinMin\u2019s new Income Tax Act would look to close loopholes enjoyed by multinationals, fully bring digital economy into the fold:<\/b> The Finance Ministry is planning to introduce amendments to the tax code that would make it harder for foreign companies to sidestep Egyptian taxes, according to a copy of the proposed bill seen by Enterprise. The legislation, which the ministry finalized after consultations with the Federation of Egyptian Industries\u2019 (FEI) tax and customs committee, would scrap the current Income Tax Act, which has become a patchwork after multiple rounds of changes, FEI committee head Mohamed El Bahi told us.<\/p>\n

Don\u2019t expect changes to income tax rates: <\/b>El Bahi was careful to note that the draft now under discussion would effectively deliver stability in tax policy \u2014 and other than closing loopholes used by foreign companies, its biggest features are things that domestic business leaders should largely welcome. Finance Minister Mohamed Maait is now set to review the bill before it heads to the House of Representatives for debate.<\/p>\n

Closing down loopholes:<\/b> The draft law would introduce a semantic amendment that would see all companies headquartered abroad, but operating in Egypt, face the 22.5% income tax. The proposed legislation would make the tax applicable to all Egypt-based subsidiaries of foreign companies and would not allow them to claim their country of origin as their tax domicile. The move is designed to curb the ability of foreign companies to repatriate profits generated from their businesses in Egypt without paying tax to the Egyptian treasury.<\/p>\n

Here\u2019s a quick rundown on other features of the act:<\/b><\/p>\n

You can finally claim your Microsoft Office 365 (or G Suite or whatever) as a legit business expense:<\/b> The bill, if enacted as it currently stands, would allow companies to use receipts for online payments and phone messages as proof of expenses. It would also cap the percentage of undocumented expenses allowed by any company at 2% of total revenues. The amendment is reportedly designed to expand what can be claimed as a tax-deductible expense, thus allowing companies to be taxed on a more accurate calculation of their net profits.<\/p>\n

Bringing the digital economy into the fold:<\/b> The bill establishes a legal definition for e-commerce that would bring all commercial transactions conducted through electronic channels under the law. Tax treatment for freezones would remain unchanged. And remember, we\u2019re not alone in wanting to tax tech giants: <\/b>Canada\u2019s governing Liberal party has said that it will, if re-elected, enact a French-style tax on foreign tech companies<\/a> operating in Canada<\/p>\n

Higher personal income tax exemptions:<\/b> The new bill would raise the personal income tax exemption threshold to EGP 24k per year, from an original EGP 8k per year. Annual incomes above this ceiling would be subject to taxes under the following bands:<\/p>\n