Optimizing Tax Exemptions for Agricultural Activities in Egypt

Individuals and corporate entities are commencing the preparation of their tax returns for the year 2023, to be submitted to the Egyptian Tax Authority before the deadline, taking into account the tax exemptions provided by the law. Specifically, law No. 91 of 2005 exempts certain activities, such as profits from land reclamation or cultivation, offering income tax exemption for a period of ten years from the start of the activity. This highlights the importance of understanding tax exemptions when planning for and submitting tax returns.

Commencement Date of Exemption

The commencement date of activity or production for land reclamation or cultivation companies is determined as follows:

• If the company is engaged in land reclamation or cultivation for others, the exemption period starts from the date of signing the first contract for the activity.
• If the company is engaged in land reclamation or cultivation for itself and sells the reclaimed or cultivated land, the exemption period starts from the date of sale of the first reclaimed or cultivated plot.
• If the company is engaged in both land reclamation and cultivation or only cultivation for itself and plants the land, the commencement date of the exemption period by the date of production, as determined by a decision issued by the Minister of Finance in agreement with the Minister of Agriculture or based on the records of the relevant agricultural directorate.

Tax Treatment After the Expiry of the Tax Exemption:

The tax accounting method after the expiration of the tax exemption period for normal persons or corporations is specified in Law No. 91 of 2005 in the second and third chapters by calculating the net income derived from agricultural reclamation activity after deducting the costs necessary for the activity (ex: depreciation, wages, and salaries, or any other necessary costs for conducting the activity).

الختام

The Income Tax Law in Egypt has many benefits and exemptions for income derived from commercial and industrial activities or activities practiced by corporate entities. It exempts taxes in some cases and allows for the deduction of losses from subsequent years or deducting all costs and expenses necessary for achieving commercial and industrial profits or calculating depreciation for establishment assets or deducting bad debts. Andersen Egypt has a group of experts aiming to guide its partners in maximizing the benefits of tax privileges in Egyptian law.

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