Global Companies Face Master File Rules in Egypt

What do a global fast-food chain, a luxury fashion house, and a tech titan have in common? They operate in dozens—sometimes hundreds—of countries. They generate billions in profits. But how much of that profit is actually taxed in each country? That’s the question Egypt’s tax authority is now determined to answer.

And to do that, it’s turning to a powerful new tool: the Master File.

This document might sound like dull bureaucracy. But it’s at the center of a major shift in how Egypt ensures that multinational companies pay their fair share—and how much stays in the national budget for public services, infrastructure, and economic growth.

What’s the Master File?

Think of it as a global financial map. The Master File lays out the structure of a multinational enterprise—who owns what, where the money is made, how income moves between countries, and whether the company is abiding by local tax rules.

It provides tax authorities with insight into whether a company is following the internationally accepted Arm’s Length Principle, which requires transactions between related parties to be priced fairly—as if they were dealing with unrelated entities.

The Master File doesn’t just focus on Egypt—it provides a worldwide view. And that’s exactly what makes it so critical.

Egypt Embraces Global Standards

Since 2018, Egypt has taken steps to align its transfer pricing regulations with the OECD’s global standards, particularly Action 13 of the Base Erosion and Profit Shifting (BEPS) initiative. These rules aim to curb aggressive tax planning by ensuring transparency in cross-border transactions between related parties.

According to Ministerial Decree No. 547/2018, companies operating in Egypt that are part of a multinational group—and have related-party transactions exceeding EGP 15 million annually—are required to prepare and submit a Master File. This must be done electronically, no later than April 30 each year, alongside their corporate income tax return.

What the Master File Contains

The Master File isn’t a one-pager. It’s a comprehensive dossier that includes:

• Corporate Structure: A full breakdown of the group’s legal and ownership links.
• Business Overview: An explanation of the group’s global activities and major markets.
• Intangible Assets: Information about intellectual property (IP), including where patents, trademarks, and other intangible assets are held, and how they are managed.
• Intra-group Financing: Descriptions of internal loans, cash pooling, and funding arrangements between group entities.
• Financial Position: Consolidated financial statements and summaries of any Advance Pricing Agreements (APAs) or tax rulings with other jurisdictions.

This information helps Egyptian authorities evaluate whether profits generated in Egypt are being appropriately taxed, or if they’re being shifted abroad through questionable pricing practices.

What Happens If Companies Don’t Comply?

Failure to submit the Master File—or submitting an incomplete or inaccurate one—can result in serious consequences:

• Financial Penalties: Companies can be fined up to 3% of the value of undocumented related-party transactions.
• Rejection of Transfer Pricing Documentation: The ETA may disregard the company’s transfer pricing position altogether.
• Profit Reassessment: Authorities may re-calculate profits using their own methods.
• Heightened Audits: Non-compliance may trigger deeper investigations and damage a company’s reputation.

Clearly, this is not just a paperwork issue—it’s a critical compliance obligation with real financial and reputational implications.

Why This Matters to Everyone

Even if you’re not in corporate finance, this affects you. When profits made in Egypt are shifted out of the country without proper taxation, public revenue suffers. That’s money that could have funded healthcare, education, transportation, and development programs.

The Master File is a step toward tax fairness. It ensures that companies benefiting from Egypt’s workforce, consumers, and infrastructure also contribute back to the system.

What Companies Should Do Now

Multinational companies operating in Egypt should act proactively by:

• Aligning tax and financial planning early in the fiscal year.
• Ensuring documentation matches both Egyptian requirements and the group’s global reports.
• Engaging transfer pricing professionals familiar with both local and international tax frameworks.
• Avoiding aggressive tax strategies that may not hold up under audit.

Conclusion: More Than a File—A Statement of Responsibility

In today’s interconnected economy, the Master File is more than just another tax document. It’s a window into a company’s global integrity. It shows whether profits are earned and taxed fairly—and whether a business is doing its part in the country where it operates.

For Egypt, it’s a vital tool in modernizing its tax regime, protecting public revenue, and fostering a more transparent, fair economy.

Next time you see headlines about “transfer pricing” or “profit shifting,” remember: these aren’t just technical terms. They tell a bigger story about fairness, governance, and where our money goes.

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