May 2013

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Law no. 11 of 2013 was issued in May 18, 2013 amendment to the provision of law 101 of 2012 and income tax law no. 91 of 2005.

Summary of the most important amendments:

Amend the tax rates for the nature persons to be as follows

Up to LE 0%

More than LE 5,000 up to 30,000 10%

More than LE 30,000 up to 45,000 15%

More than LE 45,000 up to 250,000 20%

More than LE 250,000
25%

The above mentioned rates shall be applied as from the salaries and the like of June 2013.

An annual personal exemption to be LE 7000 instead of LE 4000 and will be applied as from September 1, 2013.
The tax provisions that are related to the profits of the industrial and commercial activities, Non-Commercial professions and Real Estate shall be applied on the profits of the tax period 2013 or the tax periods after the effective date of this law.
The annual taxable income for the legal persons shall be subject to tax at a rate of 25%. The mentioned shall be applied on the profits of the tax period 2013 or the tax periods after the effective date of this law.
The provision that are related to the Add system and the withholding tax that is stated last paragraph of the article (56) added by law 101 of 2012 shall be applied be applied next month following to the month publishing the law. (The executive regulation concerning of the mentioned law has not been yet issued for the adding percentages)
The projects, companies, establishments and branches that that are established according to the Law of Economic Zones that have special nature are obliged to withhold the tax due and file it to the tax office in the next working day following to the withholding date.
Canceling of paragraph (2) item [a] of article 52 concerning the 80% of provisions for loans that banks are committed to form according to the rules issued by the Central Bank.
Impose tax at a rate of 2.5% without any deduction on the gross revenues from the disposal of the real estate whether registered or not .The amount paid of this tax shall be deducted at the time of applying item [7] of article (19).
Profits realized from new projects set up by the Social Fund For Development to the extent of 50% of invested capital with a maximum of LE 50,000 for a period five years from the date of starting the activity provided the maintain proper books and accounts.
The net revenues of self employed professionals are exempted for three from the date of starting the activity with a maximum of LE 50,000.
The capital gains realized from re evaluation including acquisition gains shall be subject to tax in case of changing the legal form of the legal person. The legal person can postpone subjecting the tax provided that the assets and liabilities are registered with book value at the time changing the legal form for the tax purpose calculation. The following are deemed to be changing in the legal form:
- The merger of two or more resident companies.
- The splitting of a resident company into two or more resident companies.
- The transforming of Partnership Company into a shareholder company or transforming of Shareholder Company into another one.
- Purchase or acquire33% of shares or voting rights either the number of shares of the values shares of a resident company.
- Purchase or acquire33% of the assets and liabilities of a resident company.
- The transformation of a legal person into Shareholder Company.

In order to postpone of subjecting to tax, the shares or quotes resulted from the changing of the legal form should not be disposed within the three years following to the date of the change and one of the involved parties should not be nonresident.

If a taxpayer includes in the tax return an amount of tax that is less than a final estimated tax whether by his approval or by one of the objecting ways related, the taxpayer shall pay an additional amount to the final tax at a rate shown opposite each of the following cases:
- 5% of the tax that not been included if the difference between the tax reported in the income tax return and the final tax if it is equivalent from 10% to 20% of the amount of the final tax.
- 15% of the tax that not been included if the difference between the tax reported in the income tax return and the final tax if it is equivalent from 20% to 50% of the amount of the final tax.
- 40% of the tax that not been included by the taxpayer if the difference between the tax reported in the income tax return and the final tax it is exceed 50% of the amount of the final tax.

This article shall not apply on the cases that are tax audited by sampling system according to article no. 94 of the income tax law.

Criminalization of non – issuance of delivering the invoice to the buyer or service recipient. Adding a new paragraph concerning the criminalization to the article (135) of Penalties’ section.
An additional fine of 25% of the withheld or added amounts on not applying the withholding and adding systems.
A new item concerning the amount of the cost of finance and invest that is related to the exempted revenues is not a tax deductible .The executive regulation shall determine the way of computation. This article is not applied on the taxpayers that are not maintaining proper books and accounts according to article no. 87 of the income tax law.
Canceling of article no. 56 bis of the income tax law 101 of 2012 amendment of the income tax law no. 91 of 2005.
A fine of LE 10,000 for violating the provisions of article no. 78 item [1] concerning the maintaining the proper books and accountants and article 83 paragraph[3] concerning the singing of enrolled accountant for income tax returns of legal persons and individuals their annual turnover exceeds LE 2,000,00.