Question Egypt - taxation of foreign sourced income

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backpacker

Entrepreneur
Has anybody ever looked a bit deeper into the current Egyptian taxation system for private individuals?
I am specifically asking regarding foreign sourced taxation of capital gains, dividends and interest.

In the Good Old Days about 10 years ago the answer was clear-cut (extract from an FAQ published by the Ministry of Finance of Egypt in 2008): "The law apply the tax regionalism principle for the normal individuals, so that the tax is only imposed on their net income realized inside Egypt, ...". It was indeed a paradise back then.
They changed that law in 2014 and the situation has become a bit unclear nowadays.
KPMG says in its latest but slightly outdated "Egypt Income Tax Guide" (dated 01-January-2017) that "Foreign-sourced income is not subject to individual income tax in Egypt provided Egypt is not the centre of their commercial or industrial or professional activities."
PWC says in its new "Egypt Overview / Income Determination" (dated 28-February-2021): "Capital gains realised from shares invested abroad would be subject to the individual income tax brackets (if Egypt is the centre of commercial industrial or professional activity of such individual)."
Has anybody any practical experience how the Egyptian taxman classifies "foreign-sourced-income" and how he defines "commercial, industrial or professional activities"?

The current legislation provides for a 10% tax on capital gains of stocks listed on Egyptian Stock Exchange, even though this tax has been suspended until the end of 2021 (Law 199 of 2020). I find it hard to believe that they only tax gains from stocks listed on their own stock exchange and let foreign gains on stocks go untaxed.

Any thoughts or practical experience is highly appreciated.
 

backpacker

Entrepreneur
There was a thread about Egypt last year spearheaded by @MiddleEuroAsia. It's an interesting read Banking and business opportunities in Egypt – an underrated, non-crs country.
@Sols
Thank you for the hint. I studied that thread a while ago. Unfortunately, it is mostly about companies and comparing jurisdictions in perspective to the the former.

I lived in Egypt for quite a long time during the Mubarak era. As such I know the country, its people and cultural peculiarities. For a foreigner it was paradise on Earth back then.
Times have changed and so has the tax situation. It is still interesting and one of the last points I am trying to puzzle together is the current tax situation for private individuals. Unfortunately, a knowledgable and useful local tax advisor is hard to come by since the generational shift has taken place.

Btw., one can now even apply for Egyptian citizenship through an investment program. May be not the best idea for most of us in this forum, but at least it is out there -> Egypt Approves Law to Grant Foreigners Egyptian Nationality Under Conditions of Investment | Egyptian Streets
 

backpacker

Entrepreneur
@mike400
Deloitte doesn't touch that matter. Nevertheless, in general terms they come with same caveat regarding taxation:
  • "Resident individuals are taxable on their worldwide income if Egypt is the “center of their commercial interests.” "
  • "Taxable income includes income from employment, income from commercial or industrial activities, and
    income from non-commercial activities (i.e., professional services)."
As can already be seen in my initial post it all centers around the definition of "commercial, industrial or professional activity of an individual". Unfortunately, I haven't found anybody yet who can define what the taxman classifies as such (and what not).

@extremedox101
Where did you get that number from?
Current general ceiling is 25%. For capital gains sourced from shares listed on the Egyptian Stock Exchange it is 10%. Foreign sourced capital gains would fall under the 25% general ceiling, but again only if Egypt is the center of commercial interests.
So, I am back to Square One: What is the definition of center of commercial , industrial or professional activities? A foreign retiree without a local Egyptian compnay should have none of the three attributes but nobody can confirm that.
 

extremedox101

road walker
Entrepreneur
@extremedox101
Where did you get that number from?
Current general ceiling is 25%. For capital gains sourced from shares listed on the Egyptian Stock Exchange it is 10%. Foreign sourced capital gains would fall under the 25% general ceiling, but again only if Egypt is the center of commercial interests.
So, I am back to Square One: What is the definition of center of commercial , industrial or professional activities? A foreign retiree without a local Egyptian compnay should have none of the three attributes but nobody can confirm that.
i spoke to local lawyers you can ask as you have been there .
 

backpacker

Entrepreneur
Does CIB bank in Egypt open personal accounts to non residents?
No, they do not!

Egyptian banks are quite strict when opening a personal bank account for a foreigner. You need:
  • Long-term residence visa.
  • Resident ID card.
  • Owner ship documents of your own Egyptian RE (apartment is sufficient).
  • Long term rental contract of an apartment (in case you not own any RE) in Egypt. The contract must be registered and officially notarized by PUBLIC notary.
If you find a branch of any Egyptian bank who opens an account with less stringent requirements (highly unlikely), it will take between two to six weeks for the account to be closed by the respective headoffice, and you be given 14-days-notice to come up with an account where they should transfer the funds (it will not be paid back in cash and transfer fees are on you).
 

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