On 16 September 2024 the OECD published the simplified peer review report on Egypt under Action 14 of the project on base erosion and profit shifting (BEPS). The report sets out the results of Stage 1 of the simplified peer review of the implementation of the Action 14 minimum standard. The report concludes that Egypt meets fewer than half the elements of the Action 14 minimum standard.

Under Action 14 of the OECD project on base erosion and profit shifting (BEPS), members of the OECD Inclusive Framework have committed to implementing the minimum standard on strengthening the effectiveness of dispute resolution procedures. Dispute resolution takes place through the mutual agreement procedure (MAP) based on Article 25 of the OECD Model, under which countries endeavour to resolve disputes related to the application of tax treaties.

Following the conclusion of the initial two-stage peer review process in 2022, a continued monitoring process has begun for all Inclusive Framework member countries. Countries that already have meaningful MAP experience are to be subject to a full peer review process once every four years; and countries that do not yet have significant MAP experience are to undergo a two-stage simplified peer review process.

The peer review report notes that Egypt has a relatively large tax treaty network with 59 tax treaties. Egypt has a very basic MAP programme, and its experience with resolving MAP cases is limited. All but three of the bilateral tax treaties contain a provision for the MAP that generally follows paragraphs 1 to 3 of Article 25 of the OECD Model. The report notes that the treaty network is partially consistent with the requirements of the minimum standard.

The report notes that, to be fully in line with all four key areas of an effective dispute resolution mechanism under the minimum standard, Egypt should update 41 of its tax treaties. Egypt has signed the multilateral instrument (MLI) to include BEPS-related provisions into bilateral tax treaties, and around half the treaties can be updated using this instrument. The remaining treaties can be amended through bilateral negotiation.

The peer review report considers that Egypt is in line with fewer than half the remaining elements of the minimum standard. Egypt does not have a bilateral APA programme in place. Also, Egypt does not meet the requirements regarding the availability and access to MAP under the standard. Access to the MAP can be denied in transfer pricing cases and in cases where anti-abuse provisions are applied.

Egypt also has not established a documented bilateral consultation or notification process for situations where the competent authority considers that the objection raised by the taxpayer in a MAP request is not justified, although the report notes that no such situation has arisen since 1 January 2016. Egypt also does not have clear and comprehensive guidance on the availability of the MAP and how it applies this procedure in practice. Egypt has not updated its MAP profile with accurate information.

The peer review report notes that Egypt would also deny access to the MAP in eligible cases where the relevant issue is decided by its first appeal level administrative process, or where the issue is pending, or already decided, in a judicial appellate process under domestic law. Also, if a tax treaty does not include a time limit for submission of a MAP request, the rules under domestic legislation may lead to a filing period of less than three years from the first notification of the relevant action. Egypt has also not published guidance on the relationship between the MAP and audit settlements.

In the period from 2016 to 2022, MAP cases were on average closed in 18.20 months, which is within the targeted average timeframe of 24 months. However, none of the cases was closed as a result of actions by Egypt’s competent authority and in the one resolved case the treaty partner provided unilateral relief.

Some treaty partner countries indicated that they experienced delays in MAP cases with Egypt, with a lack of timely responses from Egypt’s competent authority to communications and position papers. They suggested that Egypt’s competent authority should notify treaty partners in a timely manner of any changes in its personnel. The report therefore recommends that Egypt should ensure that resources are available for the competent authority function to allow the resolution of MAP cases in a timely and efficient manner.