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On November 16, 2022, the Egyptian government presented a bill amending some provisions of Law No. 91 of 2005.

The aforementioned bill proposes the distribution of the tax burden according to the income level, thus releasing many tax exemptions and incentives, the most prominent of which are the following:

  • Redistribution of the tax burden according to socioeconomic conditions, by introducing a new bracket at a rate of 27.5% for those with an annual income of more than 800,000 Egyptian pounds. This also helps to balance the tax losses resulting from the increase in the value of the personal exemption.

  • Increasing the tax exemption limit for taxpayers to 15,000 Egyptian pounds per year from 9,000 Egyptian pounds.

  • Until January 2023, electronic invoices will be used to verify expenses and expenses, and the same will be applied to electronic receipts until January 2025.

  • Increasing the exemption of taxpayers from taxable income related to life and health insurance in the amount of 10,000 Egyptian Pounds (or 15%, whichever is less) instead of 3,000 Egyptian Pounds.

  • Introduction of tax exemptions for capital gains from investments, with the aim of encouraging people to participate in institutional investments.

  • Deferral of the payment of capital gains tax by individuals or companies if the shares are sold through the Egyptian exchange to increase the capital of the issuing company. Therefore, tax must be paid on the release of expected shares.

  • Introduction of tax exemption for capital gains tax obtained from the disposal of shares listed in the Egyptian stock market during the month of January 2023 until the adoption of this bill.

The aforementioned bill aims to establish a high government council headed by the Prime Minister, to ensure the rights of taxpayers and to assist them in fulfilling their legal obligations as stipulated in the law governing the taxes.

However, it should be noted that despite the rescue package provided by the bill, it has exposed civil companies (professional companies such as law firms) to pay taxes on dividends, which can be said to be unfair and may adversely affect the operations of these companies; because legal work generates income which makes it different from commercial work.

In addition, the previous companies have also been constrained as a result of additional taxes imposed on their activities, so the affected companies will raise additional taxes, thus increasing the cost of services provided to the contestants, which may be one after the other. has a negative impact on the justice system. This point is very useful to consider when discussing the pros and cons of the bill in question.

In conclusion, this article aims to highlight that the bill introduced by the government offers tangible benefits and exemptions for investors, however, the legislator must also consider the impact the bill of companies in all sectors, especially professional service companies. .

The content of this article is intended to provide general guidance on the subject. You should seek advice specific to your particular circumstances.

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