Sherif Shawky, partner and head of the tax sector at PricewaterhouseCoopers, said that collecting taxes from non-resident global e-commerce companies such as Amazon, Google, Meta, Disney, Apple, eBay, Netflix, Samsung, and other electronic platforms may increase the country’s collection. of taxes, bringing the collection rate to about 84%.
Shawqi explained in an interview with Al Arabiya Business that the tax collection rate from these platforms will raise the rate by about 7%, adding to the current rate of 77%.
The Egyptian Tax Authority recently established, pursuant to Minister of Finance Resolution No. 307 of 2020, and Resolution of the Head of the Tax Authority No. 212 of 2021, the e-commerce unit to inventory and register all those practicing commercial or non-commercial activities on websites and pages on social media sites in the value-added tax through the “registration” system. Simplified” to enhance tax compliance efforts, achieve tax justice, and stimulate investment.
“Egypt has provided a number of incentives to investors with regard to refunding value-added taxes on companies, including providing a cash investment incentive of no less than 33% and no more than 55% of the value of the tax paid, along with approving the tax on income generated from directing activity in green hydrogen projects.” And renewable energy projects, as well as incentives for investment in specialized economic zones,” according to Shawqi.
He noted that tax incentives, although important for the foreign investor, encourage investment through: Open market, transparency, tax stability, easy transfer of money, in addition to facilitating free trade.
In this regard, he stressed that the most prominent problems faced by foreign companies investing in Egypt are profit transfers abroad due to the currency management crisis. Despite this, there are reforms in the legislative, legal and tax aspects, in addition to the major digital transformation that the Egyptian market is currently witnessing.
The financier and foreign companies also face problems of slow tax refund procedures and a long cash tax refund period, according to Shawqi, explaining that the first thing foreign companies inquire about before expressing their intention to invest in Egypt is how to transfer their profits abroad.
The recent period witnessed a number of exits of foreign companies from the Egyptian market, as a result of the currency crisis, and a number of companies pointed to the currency crisis, the most recent of which was Alshaya Group.
Shawky said that Egypt is an attractive country for investment and it is not expected that foreign companies will exit during the coming period, but the sectors most affected by the current economic conditions in Egypt are those that depend on imports, including the retail sector, especially international brands, as they rely completely on importing their products from abroad, explaining that international brands have Great opportunity to expand in the market at the present time.
Although the Egyptian market has witnessed a significant revival in acquisition activity over the past years, whether from local, foreign, or even Egyptian companies that acquired other companies outside the market, acquisitions have currently slowed down significantly despite the decline in company valuations. Decrease in the value of the local currency.
The G20 leaders officially approved the minimum global corporate tax approved by the Organization for Economic Co-operation and Development at 15% and entered into force in 2023. The finance ministers of 136 countries, including Egypt, also approved the tax targeting global companies, to make it difficult for them to avoid taxes by creating... Offices in low-tax countries. The agreement stipulates the reallocation of part of the profits tax paid by multinational companies in the countries where the consumer or service recipient is located.
Shawky commented, saying, “There is a problem related to harmonization between the global tax and the corporate income tax in Egypt, which amounts to 22.5% and is therefore higher than international trends. In addition, Egyptian companies that have business abroad find it difficult to harmonize foreign laws and comply with the global tax of 15% with compliance.” The Egyptian tax is 22.5%, in addition to companies that have international exemptions from old laws.”
He pointed out that Egypt's competition with other countries in the region is unfair and not in Egypt's interest, and the global tax will place additional burdens on countries and will place some restrictions on tax and investment incentives in other countries.
To confront these challenges, Shawqi believes it is necessary to provide greater investment benefits to attract companies, facilitate tax recovery procedures and implement economic decisions and incentives in a practical way, as well as activate the use of digital transformation platforms and develop them fully, in addition to holding a community dialogue before issuing any binding instructions to companies so as not to disrupt... Business and clarity.