Rasha Abdel Aal, Head of the Egyptian Tax Authority (ETA), announced that the Ministry of Finance, in collaboration with the ETA, has launched a comprehensive tax facilitation package in response to requests from the tax community. This initiative aims to streamline procedures, resolve tax disputes, and simplify compliance. One of the key features of the package is an integrated tax system for businesses with an annual turnover of up to EGP 15 million. Abdel Aal emphasized that the new system is designed to encourage informal economy projects to transition to the formal economy, while enhancing voluntary tax compliance by simplifying tax procedures and offering clearer guidelines for taxpayers in this category.
"The goal is to provide a smoother experience for small businesses, helping them to grow and become part of the formal economy," Abdel Aal stated.
The integrated tax system consolidates all tax regulations under a single law, which includes tax treatments for all taxable bases and incorporates exemptions and incentives aimed at fostering growth among small businesses. Among the notable benefits is a five-year tax exemption for qualifying projects from stamp taxes, as well as documentation and registration fees for company contracts and financing guarantees.
Additionally, the new system offers an exemption from capital gains taxes on the sale of assets, machinery, or production equipment, along with exemptions on profit distributions for projects that adhere to the system's provisions.
Abdel Aal further explained that projects under this integrated system are exempt from the tax deduction and advance payment systems. Instead, they will follow a simplified income tax model, based either on a flat or proportional rate depending on their annual turnover.
The package also includes a simplified process for submitting annual tax declarations for commercial, industrial, or professional activities, specifically tailored to businesses within the integrated system. Furthermore, the VAT filing process will be streamlined, requiring only quarterly declarations for these businesses. Abdel Aal emphasized that these businesses would be reviewed five years after joining the system, with the condition of compliance with the electronic invoicing or electronic receipt systems as per ETA regulations.
On the subject of wage tax, Abdel Aal noted that businesses will only need to submit the annual tax settlement declaration under the Unified Tax Procedures Law. The requirement to maintain detailed books and accounts as stipulated by the Income Tax Law will be replaced by simplified record-keeping practices for businesses operating within this system.
