The standard corporate income tax rate is 22.5% (effective for tax years beginning on 1 January 2015 or tax years ending after 30 August 2015). A higher rate of 40.55% applies to oil and gas exploration and production companies.
For the tax year ending after 5 June 2014, an additional surtax of 5% surtax was imposed on income exceeding EGP 1 million. The surtax applied for only one tax year (though originally expected to apply for 3 years).
Capital gains are treated as ordinary business income and assessed to tax at the standard corporate tax rate. Capital gains on shares listed on an Egyptian stock exchange are subject to tax at the reduced rate of 10% (but the tax has been suspended until 31 December 2021 as a part of the COVID-19 measures (see below), and thereafter gains on listed shares will be subject to 10% tax). Capital gains on the sale of unlisted shares are subject to tax at the standard corporate tax rate effective 1 July 2014.
Capital gains on disposal of treasury bonds from 1 October 2020 until 31 December 2021 are subject to tax at the reduced rate of 10% and capital gains on disposal of treasury bills from 17 May 2020 until 31 December 2021 are subject to tax at standard corporate tax rate.
As per amendments to the Tax Laws in 2017, new capital gain rules were introduced in case of a change in the legal form of resident entities, such as a corporate merger, spin-off, or change of entity type from corporate to partnership or vice versa. The capital gain arising from the revaluation of assets and liabilities resulting from a change in legal form is normally subject to tax. However, tax can be deferred if the proper tax value of assets and liabilities is established, and the shares or stakes resulting from the change in the legal form are not disposed of for a period of three years from the date of such change.
An overview of taxes levied on different types of capital gains, earned during different periods of realization is given as follows:
- The period of realization and tax rates for listed shares are:
- From 1 July 2014 until 16 May 2015- 10%;
- From 17 May 2015 until 31 December 2021- Waived; and
- From 1 January 2022 onwards- 10%;
- The tax rate for unlisted shares for the period of realization from 14 July 2014 onwards is 22.5% (standard corporate tax rate);
- The period of realization and tax rates for treasury bonds are:
- From 17 May 2020 until 30 September 2020- Waived;
- From 1 October 2020 until 31 December 2021- 10%; and
- The tax rate for treasury bills for the period of realization from 17 May 2020 until 31 December 2021 is 22.5% (standard corporate tax rate).
In response to the COVID-19 pandemic, Egypt suspended capital gains tax on gains realized on the disposal of securities listed on the Egyptian stock exchange until 31 December 2021.
Resident parent/ holding companies are eligible for a participation exemption in respect of dividends received from a resident or non-resident subsidiaries, subject to certain conditions (see Sec. 5.1.)
Dividends received by the resident recipients are subject to a final withholding tax at the following rates (effective 1 October 2020):
- 10%, when distributed by unlisted companies, including companies established in special economic zones; and
- 5%, when distributed by companies listed on an Egyptian stock exchange.
There is no further taxation in the hands of the recipient.
Previously, dividends distributed by Egyptian resident companies to resident recipients were subject to a final withholding tax of 10% (reduced to 5%, if the holding threshold of 25% for 2 years is met, see Sec. 8.2.3.).
Further, stock dividends are not subject to tax and dividends distributed by qualified investment funds are also exempt from tax, subject to conditions (see Sec. 8.2.3.).