Egypt’s Tax Treatment for Non-Profits: Compliance Essentials
Tax treatment in light of the provisions of the Income Tax Law issued by Law No. 91 of 2005 and its amendments.
The original text of Article 47 of the Income Tax Law refers to the taxation of all profits and revenues earned by legal entities.
However, due to the social dimension carried out by these associations and non-profit institutions, the legislator has decided to exempt them from income tax within the limits of their established purpose, according to Article 50, paragraph 3 of the Income Tax Law.
In light of this exemption, there are a set of obligations imposed by the legislator on these associations and non-profit institutions in order to enjoy the exemption, including:
1- Compliance with the regulations within one year from the date of implementation of Executive Regulations of Law No. 149 of 2019, according to the second article of the same law.
2- Registration with the Egyptian Tax Authority, either by visiting the relevant tax office or electronically through the electronic system.
3- Adherence to the geographical area and purpose for which they were established, as stipulated in the organization’s bylaws approved by the Ministry of Social Solidarity.
4- Keeping and maintaining records and books in paper or electronic form for the prescribed period according to the provisions of Articles 5 and 25 of the Unified Tax Procedures Law.
5- Submission of annual tax returns in accordance with Article 31 of Law No. 206 of 2020 on the Unified Tax Procedures Law.
6- Application of the tax deduction system on any amount exceeding three hundred pounds paid to any individual in the private sector, in accordance with Article 59 of the Income Tax Law, and compliance with the provisions of Articles 59 repeated, 59 repeated (1), 59 repeated (2), 59 repeated (3) of the same law.
7- Submission of quarterly declarations and annual settlement of payroll tax and related dues for employees, according to Article 31 of the Unified Tax Procedures Law.
8- Payment of the solidarity contribution value as stipulated in Article 40, ninth paragraph of Law No. 2 of 2018, amounting to 2.5 per thousand of the total annual revenues declared, using one of the payment methods prescribed by law.
Conclusion:
Article 47 of the Income Tax Law requires legal entities to pay taxes on their profits and revenues. However, Article 50, paragraph 3 exempts associations and non-profit institutions from income tax if they operate within their established purpose. To qualify for this exemption, these entities must fulfill several obligations, including compliance with regulations within one year of Law No. 149 of 2019’s Executive Regulations implementation, registration with the Egyptian Tax Authority, adherence to approved bylaws, maintenance of records, submission of annual tax returns, application of tax deduction system, submission of quarterly declarations and annual settlement of payroll tax, and payment of solidarity contribution.
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