Tax Law in Egypt: A Comprehensive Guide for Foreign Investors

Understanding Egypt’s tax system is crucial for any foreign individual or company operating there. This guide covers the key aspects of Egyptian tax law – from corporate and personal income tax to VAT, incentives, compliance rules, and dispute resolution. We explain how branches and subsidiaries are taxed, the rates and rules for companies and individuals, and important international tax issues (treaties, transfer pricing, etc.). Wherever possible, we cite current sources (as of 2025) and point to our own practice pages for further guidance. For tailored advice, Bylaw’s Corporate & Commercial team can help you navigate these rules and optimize your tax strategy (see our Corporate & Commercial practice).

1. Corporate Income Tax in Egypt

Egypt applies a flat corporate income tax (CIT) rate of 22.5% on net profits for most businesses. Resident companies (incorporated or managed in Egypt) pay tax on their worldwide income, while non-resident companies pay 22.5% only on Egyptian-source profits (e.g. income from a permanent establishment in Egypt). Special rates apply to certain sectors: for example, oil companies and the Suez Canal Authority face higher CIT rates (up to ~40%). There are no separate state or local corporate taxes beyond the CIT.

Key points on corporate tax:

• Tax base: Profits determined under Egypt’s tax law (with standard rules for revenues and deductible expenses). Interest and fees paid to foreign related parties are generally deductible, but transfer-pricing rules apply (see below).

• Dividend withholding: When an Egyptian resident company distributes dividends, a withholding tax (WHT) applies if the recipient is a corporate shareholder. Dividends paid to resident Egyptian companies are subject to WHT (typically 10% if the paying company is unlisted, 5% if listed on the Egyptian Exchange). Dividends to non-resident companies also face WHT (generally 10%, reduced to 5% if the payer is a listed Egyptian company). These WHTs can often be reduced by double-tax treaties (see below).

• Capital gains: Since 2023, Law 30/2023 introduced relief for capital gains. If capital gains are reinvested within two years, 50% of those gains may be exempt from tax. Also, capital gains on securities for individuals (and most companies) are taxed separately from income and have special rates.

Bylaw’s corporate lawyers provide strategic advice on corporate structuring and tax planning, helping you use these rules efficiently.

2. Branch vs. Subsidiary Taxation

Foreign companies can operate in Egypt via a branch or by forming an Egyptian subsidiary (typically a joint-stock or LLC). The tax treatment differs:

• Branch of a foreign company: A branch pays Egyptian tax on its Egyptian-source profits at the normal CIT rate (22.5%). Crucially, a foreign branch is allowed to deduct a management fee to its head office up to 10% of its taxable income, and this fee is not subject to Egyptian withholding tax. In practice, this means the branch only pays tax on 90% of its profits (because 10% can be sent back as a fee to headquarters without additional tax). Other than this deduction, branches follow the same tax rules as Egyptian companies.

• Egyptian subsidiary: A subsidiary (an Egyptian-incorporated company) is fully resident for tax purposes and pays 22.5% on profits. When it later sends dividends to its foreign parent, Egyptian WHT applies (usually 10%, reduced by treaty if applicable). In other words, a subsidiary’s profits are taxed first at the corporate level, then again by a dividend WHT when repatriated.

Implication: Often a branch is simpler for limited activities (a branch requires no Egyptian shareholder and no minimum capital, though it can only do the contract for which it was created). But a subsidiary may offer easier reinvestment and the ability to bring in Egyptian partners. In either case, businesses must register and comply with Egyptian tax laws (see “Registering for Tax” below).

3. Personal Income Tax (PIT)

Individuals living or working in Egypt are subject to personal income tax on a progressive scale. As of 2025, Egyptian personal tax rates are:

• 0% on annual income up to EGP 40,000

• 10% on EGP 40,001–55,000

• 15% on EGP 55,001–70,000

• 20% on EGP 70,001–200,000

• 22.5% on EGP 200,001–400,000

• 25% on EGP 400,001–1,200,000

• 27.5% on income over EGP 1,200,000

Both residents and non-residents receive an annual EGP 20,000 exemption for employment income. Employment income (salaries, wages) generally follows these brackets. Other types of income (business profits, rents, capital gains) have different treatment or filing rules (often taxed at 22.5% with standard deductions).

In practice, Egyptian tax returns are annual, and employers withhold tax on salaries. A resident’s worldwide income is taxable if their “centre of activities” is in Egypt. Non-residents pay Egyptian tax only on Egypt-source income (e.g. pay from work done in Egypt, or Egyptian rental income).

4. Tax Residency

Egypt defines tax residency similarly to many countries. An individual or company is a tax resident if their management or centre of activities is in Egypt. A resident is taxed on worldwide income; a non-resident only on Egyptian-source income. For companies, incorporation in Egypt or control/management in Egypt means residency (so worldwide profits are taxed). Non-resident companies are taxed only on profits from Egyptian operations or PE.

Note: Egypt taxes residents on global income even if earned abroad (subject to treaty credits), but non-residents are taxed only on Egyptian income. Individuals should be mindful that receiving foreign income might create Egyptian tax obligations if considered a tax resident.

Egypt has double tax treaties with many countries (see “Tax Treaties” below) which prevent double taxation. Generally, a resident taxed abroad on income that is also taxed in Egypt can claim a credit or deduction under these treaties. For example, if a U.S. or German company pays tax on Egyptian-sourced profits, a treaty may reduce or exempt some Egyptian tax.

5. Value Added Tax (VAT)

Egypt introduced VAT in 2016. The standard VAT rate is 14%. Businesses must register for VAT if their annual taxable turnover exceeds EGP 500,000. Registered businesses charge 14% on most sales (output tax) and can deduct VAT paid on inputs.

Special VAT rules:

• Exports and Free Zones: Sales of goods or services exported outside Egypt (or into designated free zones) are zero-rated (0% VAT). This means exporters and free-zone companies effectively reclaim input VAT on those supplies. The law also allows zero-rating for goods/services (local or imported) used for licensed activities in free zones.

• Essential goods and services: A broad range of basic items (e.g. 57 food essentials, medications) and public services (education, healthcare, land transport) are VAT-exempt. This ensures those sectors are either zero-rated or exempt, so no VAT is added.

• Reduced rate: Egypt maintains a special 5% rate for industrial machinery and equipment (to encourage manufacturing). All other goods/services default to 14%.

• Registration: All residents providing taxable supplies above the threshold must register via the ETA’s online portal. Importers of taxable goods must register from the start. Non-resident sellers to Egypt (without a PE) can use a special VAT registration (simplified supplier system).

Bylaw lawyers can advise on VAT planning and compliance, including zero-rating exports or qualifying for industrial rates.

6. Tax Incentives and Free Zones

To attract investment, Egypt offers various tax incentives under its Investment Law and Free Zone regimes. Key incentives include:

• Cash Rebate: Law 160 of 2023 (amendment to Investment Law 72/2017) grants a cash tax refund for approved projects. Qualifying investors in targeted industries can get 35–55% of corporate tax paid refunded as a cash incentive. This means a large portion of tax paid on the project’s income is returned to the company.

• Extended Holidays: Under Law 160/2023, new projects can extend their “special incentives” period if approved by the Cabinet, up to 9 years in total. Effectively, eligible companies may enjoy reduced tax rates or tax holidays for several years.

• Exemptions on Land and Utilities: Law 160/2023 allows exemptions such as no lease charges on project land (up to 10 years) and up to 50% discounts on infrastructure or utilities costs for the initial 10 years, subject to government parameters. This lowers operating expenses for investors.

• Free Zone Benefits: Egypt’s Free Zones (e.g. Suez Canal Zone, Alexandria Free Zones, new special zones) offer customs and tax breaks. Goods imported into free zones are customs-exempt, and products exported from free zones are VAT zero-rated. Importantly, Law 160/2023 even expanded free zone licensing to heavy industries (petroleum, steel, gas). Companies operating in qualified free zones pay 0% tax on export projects and enjoy full repatriation of profits.

• Investment Law Deductions: Beyond Law 160, the original Investment Law 72/2017 (and its executive regs) allowed special deductions and incentives. For example, some projects can deduct up to 30% of capital investment from taxable profits, and high-priority sectors may qualify for additional breaks (customs, stamp tax, etc.), though these require GAFI approval. (The Investment Law generally allows the government flexibility to grant extra incentives in approved cases.)

In practice, foreign investors can often obtain substantial tax relief by situating projects in priority sectors (energy, tech, manufacturing, exports) and applying for GAFI approval. For instance, UNCTAD notes that Law 160/2023 was designed specifically “to enhance the incentives offered to foreign investors”. These incentives make Egypt comparatively attractive in the MENA region. Bylaw’s team can assist foreign clients in structuring deals to qualify for the maximum incentives.

7. Tax Compliance and Reporting

Egyptian businesses and individuals must comply with detailed tax filing and payment requirements. Key compliance points are:

• Registration and TIN: Every taxpayer (individual or legal entity) must register with the Egyptian Tax Authority (ETA) and obtain a Tax Identification Number (TIN). In fact, the 9-digit TIN serves as both the income tax ID and VAT number. Businesses use ETA’s online portal (https://pos.eta.gov.eg) or visit a local tax office to register. Required documents include the commercial registration certificate, lease contract for business premises, and ID of the manager/shareholders. Currently, there is no registration fee for obtaining a TIN.

• Filing frequency: Tax return deadlines are set by tax type: VAT returns must be filed monthly (and VAT paid within 30 days of month-end); payroll tax (for salaries) is filed quarterly; annual income tax returns are due by March 31 for individuals and April 30 for companies (with the previous year’s year-end). All filings (income, VAT, payroll) must now be done electronically via ETA’s e-filing system.

• E-Invoicing: Under the Unified Tax Procedures Law (No. 206/2020), all taxable businesses are required to issue electronic invoices (e-invoices) for B2B sales. These invoices must follow ETA’s standards and are reported in real time. Failing to issue e-invoices or delaying submission can lead to penalties.

• Penalties: Tax penalties can be severe for non-compliance. Simple omissions (like late filing or forgetting data) incur fines typically between EGP 3,000 and EGP 20,000 per violation. For example, not e-filing a return by the deadline carries a fine of EGP 3,000–20,000. More serious evasion (underreporting income, withholding false records, etc.) triggers heavier punishment under the law. We discuss evasion penalties below.

• Withholding taxes: Companies that pay salaries, professional fees, or dividends must withhold tax at source and remit it. The payer is responsible for reporting and paying the withheld amount by set deadlines. Failure to remit withheld tax can cause both civil fines and personal liability for company officers.

• Accounting requirements: Businesses must keep financial books and tax records for at least five years. They must provide these records to tax auditors on request. Under Article 7 of the tax procedures law, ETA officials can audit a company’s books without prior notice; refusing access or obstructing audit can result in fines of EGP 3,000–50,000.

In short, Egyptian tax law demands strict compliance via digital systems. Bylaw can guide your company on meeting all reporting obligations, from registration to e-invoicing, to avoid penalties.

8. Administrative Appeals and Tax Litigation

If a taxpayer disagrees with an ETA assessment or penalty, Egyptian law provides an appeal process:

1. Internal Appeal: After receiving a tax assessment or penalty notice, the taxpayer has 30 days to file an appeal with the ETA’s internal Tax Committee. This appeal is submitted on a standardized form and must specify the disputed items.

2. Tax Appeal Committee: The internal tax office reviews and can resolve simple issues. If disagreements remain, the case is referred to an official Appeals Committee within the ETA. This independent committee must review the case and issue a decision within 60 days of referral. Both the taxpayer and the tax authority present evidence to this committee. Its decision (Form 8/1) is final on the matter within the tax administration. (Importantly, appealing to the committee does not stay tax collection – the tax must still be paid according to the committee’s ruling, although the taxpayer can pay under protest.)

3. Administrative Court: If either the taxpayer or ETA is dissatisfied with the Appeals Committee’s decision, they can file suit in the Administrative Court (State Council) within 60 days of notification. In practice, most tax cases end up in Egypt’s administrative judiciary. The Council of State (highest administrative court) has exclusive jurisdiction over tax disputes. It can annul or amend tax assessments and order refunds or penalties. Even at this stage, tax due under the impugned assessment can be collected while the case is pending.

Egypt has also occasionally offered special dispute resolution windows. For example, Tax Dispute Resolution Laws (Law 79/2016 and its renewals) have allowed taxpayers to “reconcile” outstanding disputes by paying a fee to settle without court litigation. These are temporary amnesty schemes, not guaranteed ongoing rights.

In summary, the appeal route is: ETA Office → Appeals Committee → Administrative Court. Bylaw’s litigation team has experience representing clients at each stage, ensuring their tax positions are defended with proper documentation.

9. International Tax Considerations

Tax Incentives for Foreign Investors

As noted, Egypt’s laws actively encourage foreign investment. Foreign-owned companies can access the same incentives as locals. Under Investment Law 72/2017 (as amended by Law 160/2023) foreigners can:

• Receive the same cash-tax rebate (35–55%) and extended tax holidays.

• Qualify for special deductions or allowances by project (subject to Cabinet approval).

• Fully repatriate profits and dividends (no foreign-exchange or capital controls on repatriation).

Because of these measures, foreign investors in Egypt can enjoy substantial tax benefits. (For example, UNCTAD reports Law 160 was “aimed at enhancing incentives…for foreign investors, promoting widespread investment…in Egypt”.)

Double Taxation Treaties

Yes – Egypt has an extensive network of Double Tax Treaties. Dozens of agreements (over 60) are in force with countries like the US, UK, France, Germany, UAE, China, India, and many Arab and European nations. These treaties generally reduce withholding taxes and prevent double taxation by granting credits.

For instance, under many treaties Egypt will cap WHT on dividends, interest or royalties (often to 10% or lower) and allow credits for foreign taxes paid. Treaty provisions mean, for example, that a German or Japanese company won’t pay full Egyptian tax plus full German tax on the same profit – the Egyptian tax can often be credited against foreign tax. It’s crucial for foreign businesses to review the applicable treaty – Bylaw can help interpret treaty clauses and apply them.

Business Tax Registration in Egypt

Any business operating in Egypt must register with the ETA. After establishing your company or branch, you apply for a tax card/TIN. This is done either online via ETA’s registration portal (https://pos.eta.gov.eg) or in-person at your local tax office. Required documents typically include the company’s commercial registry certificate, lease/ownership of premises, and identification of the company’s managers or partners. Once you receive the 9-digit TIN, it becomes your VAT number too. Early registration is important: it triggers your compliance obligations (filing deadlines, collection of VAT, etc.). Bylaw can assist clients step-by-step with ETA registration and obtaining a tax card.

Penalties for Tax Evasion

Egypt takes tax evasion very seriously. Under recent law (Law 30/2023), the penalties for deliberate evasion have been increased. Anyone found evading taxes (for example, by hiding income, falsifying records, forging documents, or other deceit) faces criminal punishment: 6 months to 5 years in prison plus a fine equal to the unpaid tax. In practice, a large fine is imposed automatically and the prison term can follow. The law even encourages whistleblowers by offering up to 10% of recovered taxes as a reward.

Practically, this means the risk of tax audit or reassessment is significant, and willful fraud can be life-altering. However, if a taxpayer voluntarily discloses and pays the full tax owed before court, they can “reconcile” the case. Egypt’s recent laws outline reconciliation rates from 100% to 175% of the tax due depending on case stage. In other words, if you are caught, you may end up paying far more than just the original tax.

Bottom line: Non-compliance can be costly. Our tax experts emphasize full transparency and timely payment, and can negotiate with authorities if audits occur. The whistleblower schemes also highlight a tough stance on evasion.

Transfer Pricing and BEPS Compliance

Egypt has fully aligned with OECD transfer pricing and BEPS (Base Erosion and Profit Shifting) initiatives. The Unified Tax Procedures Law (Law 206/2020) mandates that companies engage in related-party transactions follow the arm’s-length principle and prepare full documentation. This follows OECD guidelines: large multi-national groups must file a Master File, a Local File for Egyptian operations, and a Country-by-Country Report (CbCR) showing global allocation of income and tax.

• Documentation requirements: All resident companies with related-party dealings above EGP 8 million per year (about US$0.5 million) must file a Local File detailing their transactions and pricing analysis. If this threshold is not met, only minimal reporting may be needed. There is no threshold for the Master File, which must always be prepared by the group’s ultimate parent for the ETA.

• Deadlines: The Local File is due within two months after filing the annual tax return. The CbCR (if required) is due within one year after the fiscal year-end.

• Penalties: Failing to comply carries heavy fines: for example, 1% of the transaction value for failing to disclose related-party transactions on the tax return, 3% of related-party values for failing to submit the Local File, 3% for not submitting the Master File, and 2% for missing the CbCR. If multiple violations occur, penalties cap at 3% of the total transaction value. The ETA also has the power to adjust profits on an arbitrary basis if documentation is not provided.

In practice, Egypt expects multinationals to document transfer prices thoroughly and follow OECD guidelines. The country participates in BEPS Action 13 and has signed the Multilateral Instrument to update its treaties. Egypt is also preparing to implement the global minimum tax (Pillar Two) – discussions and legal changes are underway to introduce top-up taxes for large MNEs.

The Unified Tax Procedures Law (UTPL) Effect

Law 206/2020 (UTPL) was a major overhaul of Egyptian tax administration. It unified previous procedures and introduced digital processes. Its effects include:

• E-filing and E-invoicing: As noted above, all tax declarations and invoices must now be electronic This makes compliance more automated but also strictly enforceable.

• Centralized Tax Administration: The UTPL created appeal committees and clarified rights for audits, appeals, and refunds. It also empowered ETA to impose fines and criminal sanctions for violations.

• Penalties Update: One important recent change (by Law 7/2025) capped penalties for late payment or underreporting. Under the amended UTPL, any late-payment fine or additional tax is capped at 100% of the original tax. This provides some certainty: you cannot be charged more than double the tax owed for late filing under current rules.

• Other provisions: The UTPL also prohibits conflicts of interest (tax officials cannot have business ties with taxpayers), and allows the tax authority to propose advance pricing agreements and rulings (in theory).

Overall, the UTPL modernized Egypt’s tax code, bringing it closer to international standards. It emphasizes transparency and electronic compliance. Companies should closely follow UTPL rules or seek professional guidance – our tax attorneys regularly advise on UTPL compliance to avoid traps like failing to register for e-invoicing, missing electronic deadlines, or miscalculating penalties.

10. Conclusion – Seeking Professional Guidance

Egypt’s tax law is complex and constantly evolving. Rates and rules can change with new laws (e.g. the 2023 and 2025 reforms), so staying up to date is essential. This guide has outlined the main features of Egyptian taxation, but applying them to your specific situation often requires expert advice.

Bylaw Law Firm’s experienced tax and corporate lawyers help foreign clients understand and optimize their tax positions in Egypt. We offer tailored support: from company registration and tax planning to handling audits or appeals. Whether you need assistance with corporate structure, transfer pricing documentation, or dispute resolution, we can provide the guidance and representation you need.

Contact Bylaw today to discuss how Egypt’s tax laws affect your business or investment. Our multilingual team is ready to clarify your obligations, identify incentives, and ensure compliance – helping you focus on growing your operations in Egypt with confidence.