The Egyptian Tax Authority published Guideline No. 28 for 2015 on 12 November 2015. The Guideline clarifies certain issues with respect to changes introduced by Decree Law No. 96 for 2015 which amended Income Tax Law No. 91 for 2005.

The most important changes with respect to corporate taxation are:

Dividends distributed by resident companies to other resident companies are subject to a final withholding tax. The dividends are excluded from the taxable base at the level of the recipient entity. However, expenses incurred for the production of the dividends are added back to the tax base as a nondeductible investment and financing cost.

Those expenses are determined as a percentage of the overall investment and financing costs of the company in proportion to the value of the dividends. The exclusion of inter-corporate dividends from the taxable base applies to distributions received during the tax year ending after the publication of Decree Law No. 96 for 2015, irrespective of whether the dividends are received before or after the entry into force of the Decree Law.

Decree Law No. 96 for 2015 also specified that, as of 17 May 2015, the capital gains tax on listed shares, which was introduced by Decree Law No. 53 for 2014, would be suspended for a 2-year period. The Guideline clarifies that the suspension will apply to gains derived in the tax year ended after 17 May 2015, irrespective of whether the gains are realized before or after this date.

Furthermore, expenses incurred for the production of capital gains which are exempt from tax are considered a non-deductible investment and financing cost. They are determined as a percentage of the overall investment and financing costs of the company in proportion to the value of the exempt capital gains on listed shares.