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Sunday, 6 June 2021

Unified Tax Act executive regs spell out how new tax platform will work

The final version of the Unified Tax Act’s executive regulations were published this morning in the Official Gazette, minister Mohamed Maait said in a statement this morning. The regulations detail how Egypt’s newly-launched single tax portal will work and outline instructions for taxpayers on accessing and using the platform to file and pay all types of state dues including income taxes, VAT, stamp taxes, and others. The new act replaces a hodgepodge of legislation that governed Egypt’s tax procedures.

Key highlights: The regs require each taxpayer to receive a unique registration / reference number that will be used for all interactions with tax authorities, allowing for faster and simpler processing. The new platform should also standardize the use of e-signatures across all tax procedures, including the calculation and collection of taxes and filing tax appeals. In addition, the regs also make it possible for taxpayers to access their tax files, know their appointed tax official, and file requests to add or change commercial activities or settle outstanding tax disputes. You can read the regulations in full here (pdf).

The executive regulations have undergone a change since being put up for public consultation earlier this year. Members of the Federation of Egyptian Chambers of Commerce had objected to the draft on the grounds that the regulations did not deliver enough change, and would have introduced harsher penalties across the board without taking into account different cases of tax violation.

What has changed? One of the major points of contention involved the EGP 3-50k fine mandated by the law for non-jailable tax offenses such as submitting late returns, which industry representatives viewed as hefty, Ragab Mahrous, a tax advisor who took part in drafting the regs, told Enterprise. The final version gives the Tax Authority head the power to determine penalties for late fees on a case-by-case basis. The regulations also waive the 2% interest rate on late payments that were previously planned, Mahrous said. Instead, the authority will calculate interest on late taxes using the CBE discount and lending rates. Taxpayers will also be told in advance if they’re about to face an asset freeze or tax inspection, he added.

The taxman is on notice too: The regs also distinguish between delays caused by taxpayer negligence and those caused by tax authorities, making the tax department liable for late fees in the latter case.

All companies operating in Egypt are expected to be on the tax platform within two years. The first phase included 11k of Egypt’s largest taxpayers, though the platform is meant to onboard smaller companies throughout its coming three phases.

Egypt’s unified tax platform went live in a pilot launch in January after the passing of the Unified Tax Act, as part of the government’s plan to overhaul tax administration, encourage informal businesses to go legit, stimulate investment, and grant authorities better oversight on commercial transactions and tax accounts. Recent amendments obliged companies to file their taxes electronically as of this year, with the act imposing tighter deadlines on companies filing VAT returns and penalties on late filers.

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