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29 August 2018

New Egyptian Law reduces late payment interest, penalties and additional taxes by settlement, and also requires that any applications to the dispute resolution committee be made by the end of 2018

Reduction in late payment interest, penalties and additional taxes if taxes are settled

The Egyptian Government has issued new Law no. 174 of 2018 (the Law) that reduces late payment interest and penalties by a certain percentage based on the payment day of the taxes due. The objective of the Law is to encourage earlier payment of taxes due and also improve relations between the tax authorities and taxpayers.

The Law reduces the late payment interest, additional taxes and penalties specified in the following laws:

  • Stamp duty law no. 111 of 1980
  • Income tax law no. 157 of 1981 as amended
  • State development law no. 147 of 1984
  • Sales tax law no. 11 of 1991
  • Income tax law no. 91 of 2005
  • Value added tax (VAT) law no. 67 of 2016

The reduction of late payment interest, additional taxes and penalties applies to the taxes and duties assessed before the date of implementation Law no. 174 of 2018 on 15 August 2018, as follows:

Reduction on additional charges

Payment deadline

90%

If the principle amount of tax is paid within 90 days from the issuance of Law no. 174, i.e., by 12 November 2018

70%

If the principle amount of tax is paid within the next 45 days following the first 90-day period mentioned above, i.e., by 27 December 2018

50%

If the principle amount of tax is paid within 45 days of the first 45 day period mentioned above, i.e., by 10 February 2019

Late payment interest, additional taxes and penalties are not payable, if the principle amount of tax has been paid in full before the date of implementation of this law.

The reduced rates also apply on penalties imposed by the Customs Authority for non-violations and customs offenses in respect of taxes and customs duties due or payable before the date of implementation of the law.

Changes to dispute resolution committee

Law no. 79 of 2016 introduced a mechanism that allowed taxpayers to submit tax disputes to the dispute resolution committee for recommended resolution, before having the dispute addressed by the courts. Law no. 14 of 2018 on 27 February 2018 renewed the mechanism for a two-year period.

Law no. 174 of 2018 has shortened the period for submitting disputes to the dispute resolution committee. Applications to finalize tax disputes will cease on 31 December 2018, and applications submitted after that date will not be accepted.

However, Law no. 174 has extended the scope of the dispute resolution committee to include existing customs disputes, as well as disputes submitted in the courts or the arbitration committees during the period from 15 August 2018 to 31 December 2018.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Egypt), Cairo

  • Sherif El-Kilany
    sherif.el-kilany@eg.ey.com
  • Ahmed El-Sayed
    ahmed.el-sayed@eg.ey.com
  • Hossam Nasr
    hossam.nasr@eg.ey.com
  • Ahmed Abo El Fotouh
    ahmed.aboelfotouh@eg.ey.com
  • Maissa Zidan
    maissa.zidan@eg.ey.com
  • Nesreen Maher
    nesreen.maher@eg.ey.com
  • Hany El-Gamal
    hany.el-gamal@eg.ey.com

Ernst & Young LLP, Middle East Tax Desk, Houston

  • Gareth Lewis
    gareth.lewis1@ey.com

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ATTACHMENT

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Document ID: 2018-6022

 
 

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