Egypt’s DTT Toolbox: Strategies for International Tax Compliance

Egypt has concluded DTTs with 60 countries and Multilateral Conventions to attract foreign investments, comply with international taxation rules, meet, and bear its international commitments and burdens, and align with the OECD models.

The primary purpose of DTTs

The fundamental purpose of a DTT is to avoid Double taxation in addition to preventing fiscal evasion for individuals and businesses engaged in cross-border activities which can be a real challenge for them.

Taxes covered by tax treaties

Income derived from immovable property, corporation profits, capital, individuals, and Real Estate, payments on pensions, annuities, social security, wages, salaries, shipping, and air transport.

Cross-Border Services

Cross-border services are subject to taxation in Egypt. The VAT Law includes provisions for the taxation of services provided by non-residents to Egyptian businesses or individuals. It is essential for service providers to understand their obligations and potential VAT liability when offering services across borders.

Benefits of DTTs

Provide mechanisms and forms for eliminating double taxation such as tax credits, and many benefits to explore and generate which include refunds as a result of lower tax rates than domestic tax laws, and expansion of national headquarters for foreign multi-tonal companies.

Non-discrimination standard and avoid Profit Repatriation

Foreign investors usually are concerned about domestic surtaxes laws, the DTTs provide an allocation of taxing rights between a source country and a nation including for the permanent establishment of a foreign company, terms of business profits, and expense deductibility, which was the prime objective of Article 24 of the OECD MC (2017), the UN MC (2018) and US MC 2006 to ensure that the source country does not levy an additional taxation burden on foreign investments

Treaty shopping

It is widely used to take advantage of treaties of different countries and minimize tax liabilities in accordance with Action 6 of the BEPS Project.

Conclusion

Double tax treaties play a crucial role in facilitating international commerce and preventing double taxation. They provide a framework for resolving tax issues between countries, promoting economic growth, and encouraging stakeholders to invest worldwide.

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