On 19 October 2020, Egyptian President Abdel Fattah El Sisi has approved a unified tax procedures law (Law no. 206 of 2020). The Law was published in the Official Gazette. The law will be applied to tax on income, added value tax, stamp duty, fees for developing state financial resources, and other similar taxes. The Law is applicable from 20 October 2020.
The law aims to fully rely on modern automation methods in taking tax procedures after the transition phase from paperwork to automated procedures has ended. The most important changes of the Law are:
Transfer pricing
The Law stipulates that the taxpayers must prepare and submit Master file and Local file if their total related party transactions exceed EGP 8 million during a tax period. Also, failure to disclose a related party transaction in a corporate income tax return will result in a transfer pricing penalty of 1% of the value of the transaction.
Tax Returns
- Taxpayers must submit all tax returns through the accredited electronic system with an e-signature. There is no change in the CIT return deadline.
- The statute of limitations is 5 years for the inspection of a taxpayer’s book and is extended to be 6 years in case of tax evasion.
- Taxpayers must maintain books and records including invoices for a period of 5years following the submission of the tax returns.
- The tax Authority should review the amended return and approve the refund within six months from the date of application in case a lower tax due than the original return.
Tax clearance certificate
The taxpayer or representative may request the Tax Authority to issue a certificate stating his clearance from the tax and other amounts, and the Tax Authority shall issue this certificate within 40 days from the date of its request, after verifying that there are no tax receivables on the taxpayer.
Penalties
- For failing to submit a return and paying tax due, where the delay does not exceed 60 days, the penalty range is set from EGP 3,000 to EGP 50,000; and
- For failing to submit a return and paying tax due, where the delay exceeds 60 days, the penalty range is set from EGP 5,000 to EGP 200,000.
