Egypt and the UAE signed a complementary protocol in mid-February to eliminate double taxation. The signing took place in Dubai on the sidelines of the 8th Annual Arab Fiscal Forum.

In this Factsheet, we will give a brief overview of different double taxation avoidance agreements and their importance in attracting more investments. In addition, we will analyze the government’s tax revenues in the first half (H1) of fiscal year (FY) 2023/24.

• Double tax elimination or avoidance treaties serve as a tool to support the investment flows between the two contracting sides of the agreement. These treaties streamline and mitigate any tax or customs obstacles that might face foreign investors by expanding the base of their business and production activities. In addition, the agreements boost trade exchange between the two parties.
• Egypt has been working on this path to facilitate and attract more foreign direct investment (FDI) to the country. In 2023, Egypt signed three double taxation avoidance agreements with Qatar, Oman, and Croatia.
• The agreements address several areas between Egypt and partner countries, including capital gains, income tax, interest rates, corporate profits, and dividends.
• Presidential Decree No. 446 for 2020 ratified Egypt’s joining the multilateral agreement aimed at eliminating double taxation and preventing tax evasion in terms of income and capital gains taxes. The agreement included several countries, such as the USA, Jordan, Saudi Arabia, Albania, India, and Japan, among others.
• Taxes are the main source of revenue for the Egyptian government. In H1 2023/24, tax revenues represented around 6% of Egypt’s gross domestic product (GDP).
• Tax revenues increased by 19.4% year-on year (YoY) from EGP 386.9 billion in H1 2022/23 to EGP 461.8 billion in H1 2023/24, with taxes accounting for 81% of government revenues.
• Egypt imposes four main types of taxes, namely income tax, value-added tax (VAT) on goods and services, property taxes, and customs duties.
• VAT revenues stood at EGP 228 billion in H1 FY 2023/2024, making up 49.4% of total tax revenues. Meanwhile, income taxes, customs duties, and property taxes yielded revenues of EGP 144.16 billion, EGP 23.6 billion, and EGP 2.5 billion, respectively.
• Egypt targets increasing its public revenues to EGP 10.1 trillion during 2024-2027. To achieve this, the government has devised a plan centered on policies to boost tax revenues. These policies include expanding the tax base by formalizing informal sector activities, limiting tax and customs exemptions, and developing the tax collection system.

By: Amina Hussein

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