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July 21, 2023

Egypt introduces amendments to the Income Tax Law

  • The Egyptian Government has published Law No. 30 of 2023 in the Official Gazette, introducing major amendments to the Income Tax Law No. 91 of 2005 relating to businesses and individuals.
  • Law No. 30 of 2023 introduced changes to existing tax provisions, primarily on offshore loans and thin capitalization rules, and added new concepts and definitions relating to permanent establishments, capital gains tax and dividend withholding tax, among others.
  • For individuals, the key amendments relate to the newly applicable salary-tax elements, such as tax rates and exemptions.
  • Taxpayers should assess the implications of the new amendments to understand the impact on their existing business activities and tax obligations in Egypt.

Executive summary

On 15 June 2023, the Egyptian Government published Law No. 30 of 2023 (Amending Law) in the Official Gazette. The Amending Law introduces significant amendments to the provisions of Income Tax Law No. 91 of 2005 (Tax Law of 2005).

Key amendments relate to the following areas of taxation:

  1. Corporate tax
  2. Permanent establishment (PE)
  3. Financing (offshore loans) and deductibility limitations
  4. Capital gains tax (CGT)
  5. Dividends withholding tax (WHT)
  6. Salary tax

The amendments are effective from 1 July 2023 for salary tax, and for items (a) to (e) above, the amendments are applicable on the taxable period that ends after the issuance date of the Amending Law.

Businesses and individuals should consider the impact of these amendments on their transactions and activities.

Detailed discussion


On 8 June 2005, the Egyptian Government published Tax Law of 2005, replacing Law No. 157 of 1981 and its amendments, as well as Law No. 187 of 1993, as a new tax legislation for taxpayers in Egypt. Over the years, several laws have been issued providing minor amendments to Tax Law of 2005.

On 15 June 2023, the Egyptian Government published the Amending Law.

Key amendments introduced by the Amending Law

(a) Corporate tax

Cost deductibility (e-invoicing/receipts mandate)

  • Taxpayers should submit electronic invoices or receipts for costs and expenses to be considered eligible for deduction. This requirement shall be effective for invoices from July 2023, and from January 2025 for receipts. The periods can be extended for a maximum of one year. The Minister of Finance may exempt some costs and expenses from such proof.

(b) PE

The Amending Law includes significant amendments to the PE definition in Egypt as follows:

Closely related enterprises

  • The Amending Law introduces the definition of "closely related parties," as follows:

Enterprises are closely related if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same persons or enterprises. In all cases, the person is considered closely related to a project, if the person possesses directly or indirectly more than 50% of the total shares, transfer or ownership rights or equity.

Construction PE

  • The Amending Law now sets a period threshold for a construction PE to be deemed to be created. As such, a building site, construction or assembly project, installation, or related supervisory activities lasting for a period or periods exceeding, in aggregate, more than 90 days during any 12-month period, will be considered a PE.
  • The Amending Law also stipulates that the amount of time closely related parties spend during different periods of time on related activities that are carried out in Egypt at the same site (applicable also to related supervisory or consultancy activities), will be added to the total period of time during which the first project (the first enterprise from the group of enterprises that initiated the activities of providing the service) carries out its activities at the site (lasting for a period or periods exceeding, in aggregate, more than 90 days during any 12-month period) to constitute a PE.

Dependent agent scope

  • The definition of a dependent agent has been broadened to cover situations in which an agent habitually plays the principal role leading to the conclusion of contracts.

Independent agent

  • Independent status for an agent shall not be deemed to exist if it is proven that the agent works exclusively or semi-exclusively on behalf of an enterprise or on behalf of enterprises closely related to the enterprise. Such an agent shall be considered as a PE.

The Amending Law also introduced new PE definitions as follows:

Service PE

  • A service PE shall be triggered when rendering services, including consultancy services, are provided by an entity through employees or other individuals engaged by the project, and where such services continue to be performed for the same project or for a connected project in Egypt for a period or periods exceeding, in aggregate, more than 90 days during any 12-month period.

Exploration and extraction activities PE

  • Activities carried out in Egypt in connection with the exploration, extraction or exploitation of natural resources, including the use or installation of substantial equipment, lasting for a period or periods exceeding, in aggregate, more than 90 days during any 12-month period constitutes a PE.

Insurance PE

  • Insurance PE shall be triggered for foreign insurance projects when collecting premiums or insures existing risks in Egypt through a person other than an independent agent.

PE exemption list limitations

  • The PE exemption list includes specific activities carried out through a fixed place that are not considered as constituting a PE. However, the Amending Law excluded certain commercial activities from the PE exemption list if they are carried out through any fixed place of business used or maintained by closely related projects that engage at the same place or at any other place in Egypt, whereby:
    • This place or any other place shall constitute a PE for a project or a closely related project.
    • The total combination of activities carried out by two projects (enterprises) at the same place, or by the same project or closely related projects in two places are complementary functions that form part of a coherent business operation, not a preliminary or auxiliary functions.

(c) Financing (offshore loans) and deductibility limitations

WHT exemption relating to interest payments

  • The WHT exemption on interest paid on loans and credit facilities, obtained by the Government, local government units, or other public juridical persons, from sources abroad, still applies.
  • The WHT exemption on interest paid on long-term loans (period of more than three years), obtained by companies in the public sector, the public business sector, and the private sector, is no longer applicable. With respect to existing loans obtained by the companies, the WHT exemption still applies on the interest paid before the enforcement date of the Amending Law.

Thin capitalization ratios for interest deductibility

    • Under the new amendments, the maximum debt-to-equity ratio shall decrease gradually as follows:
      • 2023: The debt-to-equity ratio will remain 4:1
      • 2024-27: The debt-to-equity ratio will be 3:1
      • 2028 and onward: The debt-to-equity ratio will be 2:1

(d) CGT

CGT filing by nonresidents

  • The deadline for nonresidents to file CGT returns has been extended to 60 days from the date of transaction, instead of five working days from the beginning of the month following the transaction date.

CGT on sale of shares by residents

  • The Amending Law waives the unpaid CGT realized from residents' disposal of listed shares, starting from 1 January 2022 until the date of the enforcement of the law. CGT should now apply as of the enforcement date of the Amending Law.

Acquisition cost

  • Capital gains are calculated based on the difference between the selling price, exchange price or any other form of consideration from the disposition of securities, after deducting any brokerage fees, and the acquisition cost of those securities.
  • The Amending Law introduces the mechanism for calculating the acquisition cost that should be deducted when determining capital gains, in relation to the manner of disposal of listed shares by individuals and corporations. The upcoming executive regulations, in accordance with the Financial Regulatory Authority, shall specify the rules for calculating the cost of acquisition.

Share swap

  • Capital gains realized from a share swap between listed and non-listed companies depositing their shares with a central depository and registry company will not be subject to CGT. The CGT will be due in case of subsequent disposal of the shares based on the difference between the selling price and the actual acquisition cost of the shares before the swap.

Capital increase

  • CGT will be deferred on capital gains realized by natural persons or legal persons from selling their shares in Public Offering on the Egyptian Stock Exchange to increase the company's capital.
  • This CGT will only be due if the shareholder disposes the subscribed shares and the actual acquisition cost before the offering will be taken as a basis for calculating the capital gains. The upcoming executive regulations are expected to provide more clarity in this regard.

(e) Dividend WHT

Offset dividend WHT between resident companies

  • A new tax treatment for dividend distributions between resident companies has been added based on the Amending Law, stipulating that tax due on dividends paid by a resident distributor to a resident entity shall be deducted from the tax to be paid (i.e., tax offset) on dividends distributed by the latter entity to a third resident entity, provided certain conditions are met.

WHT on fund dividends

  • The Amending Law increases the applicability of the dividend WHT tax, such that dividend WHT will apply to interest paid and distributions received by investors in debt instruments, venture capital funds and companies, equity investment funds, real estate investment funds, and holding funds established in accordance with the capital market law. WHT shall apply at the rate of 15% for legal persons and 5% for natural persons.

(f) Salary tax

Salary tax amendments

  • The personal exemption amount has increased to 15,000 Egyptian pounds (EGP15,000) from EGP9,000.
  • The first bracket threshold subject to 0% has increased to EGP21,000 from EGP15,000.
  • A new tax rate of 27.5% has been introduced for taxpayers with annual income exceeding EGP1.2 million.
  • The tax exemption on life and health insurance premiums for the taxpayer's benefit or for the benefit of the spouse or minor children, and any insurance premiums for entitlement to a pension, has been amended to the lesser of 15% of the net taxable income or EGP10,000 (instead of EGP3,000) annually.           
  • The 10% tax rate deducted by the non-primary taxpayers shall not be considered as a final tax; rather, it will be an advanced value. The non-primary taxpayer is required to notify the primary taxpayer and the Egyptian Tax Authority (ETA) with the person's income and tax deducted and the primary taxpayer must then calculate the tax brackets and reconcile the actual tax due and the tax that has already been deducted


Taxpayers should take into consideration the amendments to the Tax Law of 2005 based on the changes introduced under the Amending Law, evaluate which amendments will affect their transactions and activities, and initiate measures in a timely manner to meet their tax compliance obligations.


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

Ernst & Young Egypt, Cairo

Ernst & Young LLP (United States), Middle East Tax Desk, New York

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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