Navigating Tax Implications of Exchange Rate Fluctuations in Egypt
As we approach the corporate income tax filing season for the year 2024, the Minister of Finance has issued Decision No. 34 of 2024 concerning the treatment of foreign exchange gains/losses when determining taxable income for the 2023 fiscal year. This decision addresses fluctuations arising from changes in foreign exchange rates from non-Egyptian banks, particularly affecting entities engaged in foreign currency transactions such as import and export activities.
For the taxation of individuals’ income for the year 2023, the calculation of taxable profits/losses now considers the fluctuation rates resulting from managing foreign exchange differences, as opposed to the rates published by the Egyptian Central Bank.
| January to April | May to August | September to October | November to December |
| 9% | 24% | 34% | 60% |
In conjunction with this, the Prime Minister has issued an amendment to certain provisions of Egyptian accounting standards, extending the application period for Appendix (C) of Egyptian Accounting Standard No. (13) amended in 2015. This extension, effective until the end of December 2023, allows for optional and temporary accounting treatments to address the impacts of extraordinary economic decisions related to exchange rate movements.
This decision empowers companies to undertake optional and temporary accounting adjustments to manage the effects of exchange rate fluctuations until December 31st, 2023. The rationale behind this amendment is to enable companies whose hold assets in foreign currencies before significant exchange rate movements to recognize currency differences within the cost of these assets. This includes also adjustments for payments made towards financial commitments in foreign currencies during the applicable financial period.
By partnering with Andersen Egypt, businesses can leverage professional expertise to navigate the complexities of Egyptian tax regulations, ensuring compliance and strategic financial management.
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