Minister of Finance Hany Kadry Dimian has announced plans for Egypt to take on a policy of tax sharing internationally in an effort to protect the Egyptian taxpayer from double taxation. This is within the framework of government procedures to increase revenue and reform an exhausted economy.
In a statement to Daily News Egypt on Saturday, Dimian stated that sharing tax means imposing taxes on the taxpayer who has income resulting from financial and professional activities outside of the country, but whose main income is made within Egypt. He gave the example of an Egyptian doctor who works for an Egyptian hospital but has gone abroad to perform a surgery in Germany; the taxes imposed on him would be shared with Germany.
“We are conducting a comprehensive review of all tax legislation regarding business practices in all states to determine the rates and average for tax sharing,” stated Dimian, though an outcome of the review has yet to be reached.
In a move to reform the tax system, the Egyptian government has imposed income taxes on both resident and non-resident Egyptians on their commercial, industrial and professional activities abroad, to encourage them to make Egypt “the centre of their activities”.
However, Egypt is not a signatory to agreements on avoiding double taxation with certain countries, which could threaten to lead to double taxation for the taxpayer who exercises commercial, industrial or professional activities within those countries. Dimian has stated that the comprehensive review, as well as talks with countries that do not have binding agreements with Egypt on double taxation, will ensure that double taxation is avoided at all possible costs.
“Income from stock market taxes and income taxes is estimated at EGP 10bn, of which EGP 3.5bn to 4bn will come from tax distributions; EGP 2bn will come from capital gains tax as well as tax planning. An additional 5% to the income tax on those earning more than EGP 1m yearly will provide EGP 3.5bn of the total income,” according to Dimian.
He added: “The government is serious in reviewing legislation, reforming the economy, and improving the business environment through providing land and utilities. The tax rulings should not influence the investor’s decisions, but will nevertheless help the business environment and the investor’s ability to make profits.”
In regards to the recent government move to increase prices on fuel and electricity, Dimian stated: “Dealing with the abnormalities in subsidy distribution will help revive the national budget and help the government finance and invest in the education and health sectors while also improving Egypt’s credit ratings.” He added: “The government is serious about economic reform and will fight to control prices on the street.”