Ministry of Finance Decree No. 172 of the year 2015 Amending Some Provisions of the Executive Regula-tions of the Income Tax Law promulgated by the Min-ister of Finance Decree No. 991 of the year 2005
The Minister of Finance, After perusal of the Capital Market Law No. 95 of the year 1992; Law No. 83 of the year 2002 on Economic Zones of Special Nature; Income Tax Law No. 91 of the year 2005; and The Executive Regulations of the Income Tax Law, promulgated by the Minister of Finance Decree No. 991 of the year 2005; and Based on the view of the State Council;
HAS DECREED
(Article One) Texts of Articles (9), (Clause “2” of the first paragraph, and second paragraph of Article 12), (15), (24), (42), (51), (55), (60), (61), (63), (74), (76), (first paragraph of Article 82), (89), (110), (111), (122) and (145) of the Executive Regulations of the Income Tax Law, referred to above, shall be replaced by the following texts: Article (9): In applying Articles Nos. (6, first paragraph) and (8) of the Law, income tax shall be due on a taxpayer’s total net income in excess of five thousand Egyptian pounds, without being duplicated, reduced, or prorated, for a resident or non-resident taxpayer, even if the term of its business or activity does not cover the whole tax period. In case of multiple income sources, the aforementioned bracket shall be deducted first from salaries and the like. If a part of the bracket remains, it shall be deducted from any other income.
Article (12), first paragraph, Clause 2: 2- An annual personal exemption of LE 7000 (seven thousand Egyptian pounds) for the taxpayer provided for in Clause 1 of Article (13) of the Law.
Article (12), second paragraph: In applying clauses (4) and (5) of this Article, total exemptions granted to a taxpayer shall not exceed, (150/0) of its net revenue, or ten thousand Egyptian pounds, whichever is the lesser. No exemption for the same contributions and premiums provided for in these two clauses may be claimed for any other income prescribed in Article (6) of the Law.
Article (15): Pursuant to Article (11) of the Law, income tax shall apply at a rate of (10%) on the amounts earned by resident persons from employers, other than their principal employer, without any withholding allowances, or any further deduction, including the zero bracket amount pre-scribed in Article (8) of the Law, and the exemptions provided for in Article (13) of the Law. Employers paying the amounts set out in the first paragraph of the present Article shall withhold the tax and remit it to the competent tax office within the first fifteen days of every month, on their payroll in the preceding month, using Form No. (2 – Salaries). The principal employer shall mean the body in which the employee is employed and is paid his principal salary. The entity from which the employee receives more than (50%) of his income during the tax period shall be treated as a principal employer. Such entity shall withhold an amount on account of the tax liability for the amounts paid to the employee, according to Articles Nos. (8), (10) and (13) of the Law; in this case, the provisions of Article (11) of the Law shall apply on the basic salary received by the employee from the entity in which he is employed. The tax due shall be computed according to the provisions of this Article as per form No. (3 – Salaries). In applying the provision of Article (11), the competent tax office shall mean the tax office where the non-principal employer falls under its jurisdiction.Income tax shall apply on the amounts paid to non-residents, regardless of the entity or authority employing them to render services under its supervision, in accordance with the general provisions of the tax on salaries and the like, and as per the tax rate prescribed in Article (8) of the Law.
Article (24): The net profit set out in the second paragraph of Article (17) of the Law shall be determined based on actual revenues and costs. Tax treatment for capital gains realized from the sale of the assets prescribed in Clause No. 3 of Article (25) of the Law shall be effected in accor-dance with the provisions of Article (26) thereof. In the event that a resident company invested in a non-resident company, the equity rights method shall apply in the evaluation of investments, provided that the following prerequisites are met: a) Revenues are not taxable, or are exempt from the tax, in the other countries in which the non-resident company is registered, or the tax rate in these countries does not exceed (75%) of the tax rate applicable in Egypt; b) The ownership percentage in the non-resident company exceeds (10%); and c) More than (70%) of the revenues of the non-resident company results from dividends, interest, royalties, or fees paid in return for management or leases. When applying the equity rights method, it should be taken into consideration that deter-mination of the profits resulting from disposal of such investments should be based on the difference between the cost of investment possession and its sale value.
Article (42): Application of the exemption established in Clause (6) of Article (31) of the Law, regarding profits of new projects funded by the Social Fund for Development, shall be conditional on meeting the following requirements: 1- The date of commencing activity or starting production of the project is subsequent to the date of receiving the finance; The tax exemption period shall be five years starting from the date of exercising the activity or starting production, as the case may be. The exemption shall be invalid if the project’s legal form, or type of activity, has changed, or the project has been assigned. 2- The profits of the project is resulted solely from commercial and industrial activity; 3- The project takes the form of a sole proprietorship; and 4- The maintenance of regular and simplified books and accounts consistent with the type of activity performed. The tax exemption period shall be five years starting from the date of exercising the activity or starting production, as the case may be. The exemption shall be invalid if the project’s legal form, or type of activity, has changed, or the project has been assigned.In all cases, the tax exemption shall not apply except to the profits generated from the funding extended by the Social Fund for Development, and within the portion of finance ratio to the invested capital, as per the feasibility study – submitted by the taxpayer to the Fund- according to which finance has been provided. Such ratio shall not change during the exemp-tion years, even though the capital of the establishment has changed. In all cases,exemption shall not exceed (50%) of the annual profit, or (fifty thousand Egyptian pounds) whichever is the lesser. Invested capital shall mean the total net fixed assets, plus ,current assets after deduction of the value of current liabilities.
Article (51): In applying the provisions of Article (42) of the Law, the notice of tax due given by the competent tax office to the disposing person shall be effected on Form No. (8, Real Estate), whereas the notice of taxable dispositions of real estate given by the disposing person to the competent tax office shall be effected on Form No. (l6-Bis, Enumeration). Upon paying the tax, the disposing person shall be delivered a receipt by the competent tax office, serving as a proof when notarizing the disposal in the Notary Public. The taxpayer shall also be deliver Form No. (8-Bis, Real Estate Disposals) indicating his payment of the tax. When notarizing the disposal, Notary Public offices shall collect tax due and, in return, deliver to the person concerned a receipt of the paid, unless the person provides Form No. (8-Bis, Real Estate Disposals) proving that the tax has already been paid to the competent tax office. Every Notary Public office shall remit the amounts it has collected of the tax due in a date no later than thirty days from the date of application for notarization, and remittance shall be affected by a cheque accompanied by forms No. (9, Real Estate) and (38, Real Es-tate), unless the tax has already been paid to the Tax Authority before that date. Remittance shall be effected as follows: 1- For offices that geographically fall within the boundaries of Cairo Governorate, the tax shall be remitted in the following manner: a) For east, west and north Cairo, the tax shall be remitted to Cairo Tax District – Eighth; and b) For south and central Cairo, the tax shall be remitted to Cairo Tax District, Fourth. 2- For governorates that have one general tax district, the tax shall be remitted to that district. 3- For governorates that have more than one general tax district, the tax shall be remitted to the first tax district.
