Tax Authority addresses challenges faced by Indian companies in Egypt
Rasha Abdel Aal, the Chairperson of the Egyptian Tax Authority, reaffirmed the authority’s dedication to engaging with tax and civil society institutions to resolve their challenges. This commitment was demonstrated by the authority’s swift response to the Indian consulate’s invitation to discuss and address the obstacles faced by Indian companies operating in Egypt.
During the meeting with the Indian consulate, Abdel Aal emphasized that this aligns with the directives of the Minister of Finance to maintain effective and ongoing communication with investors. She highlighted that one of the key efforts of the Ministry of Finance and the Tax Authority has been to implement a range of tax facilitation measures aimed at simplifying tax procedures and creating a favourable environment that supports investment. This is part of a broader effort by both the ministry and the authority to build trust and transparency with the tax community, as well as to adopt and implement constructive proposals from stakeholders.
Ashraf El-Zayat, Head of the Examination Division at the Tax Authority, said a plan has been drafted to hold regular meetings with investors and tax and civil society organizations to discuss the challenges and obstacles investors face and work on solutions.
He outlined that one of the main components of the tax facilitation measures is the activation of the Investor Support Unit, which aims to address and resolve challenges faced by investors and taxpayers. Additionally, a permanent advance opinion unit will be established to prepare, review, and approve tax research, as well as clarify the future tax implications for taxpayers and investors, providing reassurance to those looking to start new businesses or expand existing ones.
El-Zayat pointed out that the measures also include responding to any questions the tax community may have and helping taxpayers evaluate their business situations before proceeding. Furthermore, neutral entities will be involved to assess taxpayer satisfaction with tax services, ensuring sustainable development and the ability to correct course where needed.
He stated that tax audits will be conducted based on a modern risk system that matches the technical capacity of staff to prevent delays. Additionally, the required documents will only need to be submitted once, without the need for repetition across different tax categories. The rules and mechanisms for tax audits will be standardized and published according to the nature of the activity, with prior notice of the documents required for tax audits, giving taxpayers ample time to prepare. Regarding withholding tax data, companies will not be required to provide this information during audits, making the process smoother and more efficient.
El-Zayat added that taxpayers will have the opportunity to reconcile their status before audits through the option to submit or amend tax returns from 2020 to 2023 without facing the penalties usually imposed. The threshold for submitting transfer pricing documentation between “related parties” has also been doubled to EGP 30m annually.
Furthermore, a simplified and incentivized tax system will be introduced for establishments with annual revenues not exceeding EGP 15m, requiring only four VAT returns throughout the year. Notably, the first tax audit will take place after five years, and the Tax Authority will not demand any back payments from those who register voluntarily. Efforts will be made to expedite VAT refunds and quadruple the number of beneficiaries annually to provide necessary liquidity for projects.
The central clearing system will enable taxpayers to settle their accounts electronically between their dues and debts to the government, improving cash flow. A cap will also be set on late payment penalties, ensuring they do not exceed the principal tax amount, thereby preventing taxpayers from facing significant burdens due to delayed audits or prolonged dispute resolution processes with the authority.
The Deputy Ambassador of India expressed gratitude to the Egyptian Tax Authority for accepting the invitation to this meeting, emphasizing their dedication to fostering cooperation with the Indian embassy in Egypt and addressing the challenges facing Indian investments. She noted that this support comes as many new Indian industries and investors have recently entered the Egyptian market, receiving strong backing and attention from the Tax Authority.
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