Promoting Industrial Growth and Encouraging Foreign Direct Investment in Egypt
Taxation
- The continued practice of subjecting taxpayers to arbitrary tax assessments, and the disregard of balance sheets and tax returns that they submit.
- Prolonged delays in tax examination sometimes reaching 10 and 15 years, which result in businesses incurring additional financial burdens represented in delay penalties and an additional tax that exceeds the original tax.
- To interrupt the statute of limitations, tax offices issue arbitrary tax assessments that do not take into account the tax returns submitted by the business; the estimated tax liability may exceed sales. This practice complicates the process and results in a reassessment, even if five years (the statute of limitation period stipulated in the law) have already elapsed.
- On examining tax returns, tax officers disregard the records and documents submitted by the taxpayer; in this case, examining officers who claim that a violation exists must prove this violation and distinguish tax evasion from mistakes due to human error.
- A disconnect and lack of coherence among the various divisions within the tax office—the commercial inspection, the salary tax, the stamp tax, and deduction at source. This results in wasting the time of both the taxpayer and the tax officer since redundant files, containing the same documents, are prepared for examination by more than one officer, sometimes at the same time. The examination process must be consolidated to avoid wasting the time of taxpayers and tax officers.
- The Intransigence of the tax office with regard to the examination of tax files that are unlikely to generate revenues; no due regard is given to considerations related to tax compliance and satisfying all documentation requirements.
- Without first exhausting
- all amicable options, tax offices rush to issue administrative orders to attach all funds belonging to a business, instead of attaching the equivalent of the amount of the taxes that is actually due; this practice disrupts the daily operations of the business until the attachment is lifted.
- Cease the practice of arbitrary tax assessments; ensure the full and consistent application of the law—tax returns submitted by investors must be honored. Conduct random reviews of tax returns, in case of inconsistencies, the tax returns should be reassessed.
- Tax authorities should endorse an enterprise’s approved balance sheets (prepared within the past five years), in order to resolve tax disputes and collect taxes due in a timely manner.