On 19 October 2020, the Unified Tax Procedures Law No. 206 of 2020 (the “Law”) was issued to introduce unified tax procedures of assessment and collection of the direct and indirect taxes. The Law also establishes the legal basis for the transformation to the new tax e-system and aligns with the current dynamic digital economy.
Tax Documents can be submitted in any language
According to the Law, all documents, records and information related to taxes can be submitted in any language, provided that a certified translation from an accredited translator is attached.
Tax registration number
Every taxpayer shall have a unified tax registration number for all types of taxes. Taxpayers must include the unified tax registration number in all correspondences and transactions.
The tax return filing deadlines have been amended as follows:
- Monthly VAT return with a deadline of month following the end of the tax period.
- Quarterly payroll tax return.
Taxpayers engaged in commercial or financial related party transactions of EGP 8 million or more should submit the three-following documents.
- Master file to provide an overview of the group’s business operations as a whole.
- Local file to provide information on an entity level regarding its business activities. There should be one local file per entity on an annual basis.
- Country by Country Report (CbCR) to showcase the global allocation of revenues, income taxes paid, capital and retained earnings per jurisdiction. It also shows the key economic activities of the entities of the group. Taxpayers who fail to disclose their related party transactions will be subject to a penalty ranging from 1% to 3% imposed on the total value of the related party transaction in the respective year.
The Law obliges the Egyptian Tax Authority (“ETA”) to remit tax refunds within 45 days from the date a refund request is submitted. Otherwise, the ETA will have to pay late payment interest.
Taxpayers can file an advance ruling to get the ETA’s opinion on any transaction/ arrangement with a considerable tax impact. The relevant department of the ETA will have 30 days to respond.
Companies and other legal and natural persons selling a product or providing a service should register all their purchases and sales on the electronic system. Documents can be submitted in an electronic form. An electronic signature will have the same authenticity as a written signature.
Tax clearance certificate
Taxpayers who intend to refund any overpaid amounts from the ETA should obtain a tax clearance certificate from the ETA confirming that there are no outstanding taxes due. The ETA should issue the certificate within 40 days from the date of submission of the request.
Exchange of Information
The ETA has the right to exchange information with countries that have tax treaties with Egypt, as well as with government agencies, public bodies, trade unions and associations for tax purposes and law enforcement, without breaching the commercial, industrial or professional confidentiality of the taxpayer.
The Law states that the appeal request must include precisely all disputed aspects of the tax assessment and the substantial reasons of the appeal. Appeals that do not include details of the disputed items will be disregarded.
The Law maintained the confidential nature of the information of the taxpayers and prohibited tax employees from the disclosure of any information related to taxpayers.
A new range of penalties are introduced for non-compliance with tax laws, as well as new tax evasion settlement procedures. The penalties include fines and imprisonment from 6 months to 3 years.
For more information with respect to this note, please contact Eman Riad or Loai Mahmoud.