On 3 December 2020, Egypt has published Law No. 211 in the official gazette. The Law makes some important changes to the recently published Unified Tax Procedure Law (Law no. 206 of 2020). The new Law mainly changes transfer pricing non-compliance penalties and tax return filing penalties.
The Law is applicable from 4 December 2020. The most important changes in the Law are:
Transfer pricing Penalties
- Failure to disclose a related party transaction in a corporate income tax return within 20 October 2020 will result in a transfer pricing penalty of 1% of the value of the transaction during the fiscal year;
- Failure to submit a master file or local file on time will result in a transfer pricing penalty of 3% of the value of the transaction during the fiscal year;
- Failure to submit country-by-country reporting and notifications on time will result transfer pricing penalty of 2% of the value of the transaction during the fiscal year; and
Failure to meet obligations more than one from the above will result in a transfer pricing penalty of 3% of the value of the transaction during the fiscal year.
Tax return penalties
Failure to submit monthly value-added-tax (VAT) returns, quarterly salary tax returns, and annual corporate income tax returns within 60 days of their standard after the filing due date will result penalty ranging from EGP 50,000 to EGP 2 million.
Moreover, taxpayers may also be subject to imprisonment for 6 months to 3 years for failing to submit 3 annual returns or 6 monthly returns.
