resident and non-resident shareholders, whether physical or juridical persons (the Shareholder). The rate of 10% is reduced to 5% if the Shareholder holds more than 25% of the capital and/or has voting rights for at least two years. Personal Income Tax Personal Income Tax is imposed on the annual net salaries paid to residents at the following progressive rate:
Foreign Employees Foreign employees must obtain a work permit in order to work in Egypt. A request is submitted to the Ministry of Manpower and Immigration to consider granting a one year work permit, which can be renewed each year for a maximum of three years. The ratio of foreign employees must not exceed 10% of the total number of employees and must not exceed 20% of the company’s payroll. Real Estate In general, real estate ownership is protected by law against expropriation and there are no restrictions on foreign nationals owning, leasing or otherwise real estate in Egypt except for specific locations, namely Sinai and/or North or South Kantara. Banking, Finance and Exchange Control The Central Bank of Egypt ( CBE ) decided to float the Egyptian Pound as of November 3, 2016 in order to secure a USD 12 billion loan from the International Monetary Fund. As a consequence, exchange rates on both the parallel market have come into line with official rates. Foreign investors are generally allowed to deal with the banks that are registered with the CBE and open bank account(s) therewith. However, within the limits allowed under the Egyptian laws, each of the said banks has its own policies for providing banking and finance services. Opening a bank account can be made on the spot with most banks in Egypt providing that all necessary documents are submitted to the bank. Furthermore, there are a number of banks in Egypt that allow their customers to open bank accounts online. Investors are freely allowed by law to transfer dividends to home country; however, it is recommended that investors secure their own source of foreign currency as each bank is currently applying a list of priorities for exchanging Egyptian Pounds with any of the foreign currencies. This list may differ from bank to bank. Tax Companies in Egypt are subject to the following taxes: Income Tax Companies are subject to a flat rate of 22.5% on yearly net income. As of July 2014, a 10% withholding tax has been imposed on the distribution of dividends by Egyptian companies to
Income
Taxable Rate
0%
0 – EGP 6,500 (USD 0 – 359.51)
EGP 6,501 - EGP 30,000 (USD 359.56-1659.0994)
10%
15%
EGP 30,001 - EGP 45,000 (USD 1659.1494-2488.65)
EGP 45,001 - EGP 200,000 (USD 2488.70-11058.83)
20%
Above EGP 200,000 (USD 11058.83)
22.5%
Tax on salaries must be delivered to the relevant taxation department within the first 15 days of the month following the deduction. In addition, a salary tax return shall be submitted on a quarterly basis stating the number of employees, the total salaries during the last three months, the amounts withheld on account and the paid amounts. Sales Tax According to the Egyptian Sales Tax Law (the Sales Tax Law ), the General Sales Tax ( GST ) shall be levied on locally manufactured goods or imported goods and on services. The standard tax rate levied on commodities is 10%, except for certain commodities – stipulated in the Sales Tax Law – which have special tax rates. Value Added Tax A new law, No. 67 of 2016, was issued and enforced in Egypt in September 2016 applying VAT to all products and services with some exemptions (the VAT Law ). Before the adoption of the new VAT Law, there was no VAT in Egypt but only GST, which was levied at a standard rate of 10% on services and locally-manufactured or imported goods. The new VAT Law revoked the General Sales Tax Law No. 11 of 1991 and applied VAT at a standard rate of 13% for the financial year 2016/2017, which rate shall be increased to 14% in the financial year 2017/2018 (the Standard VAT Rate ). In addition to the Standard VAT Rate, the new VAT Law applies also an additional VAT at different rates to specific products and services. For example, mobile telecoms services will be subject to the standard VAT at the rate of 13% for the financial year 2016/2017 and 14% as of the financial year 2017/2018 in addition to a special VAT tax at
Africa Investment Guide | 23
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