Egypt Withholding Tax (ضريبة الخصم تحت الحساب)

Egypt Withholding Tax (ضريبة الخصم تحت الحساب) Skill v0.1

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

Jurisdiction is required. Set jurisdiction: EG in frontmatter even when the folder path implies it. Sync to openaccountants.com skips files without a resolvable jurisdiction.

This skill covers Egyptian withholding tax (WHT) obligations for resident payers making payments to non-residents (and in some cases, residents) on:

• Dividends
• Interest
• Royalties
• Technical, management, and consulting services
• Rental income (movable/immovable property)
• Capital gains on disposal of Egyptian assets

The AI must reply in the user's language (English or Arabic / Egyptian Arabic) and may use the native tax terms shown throughout.

Currency note: all figures are in Egyptian Pounds (EGP / ج.م) unless otherwise stated. YMYL — verify before relying. Egyptian WHT rates and treaty benefits changed in 2024-2025. Where this skill says "verify current value," re-confirm against the Egyptian Tax Authority (ETA — eta.gov.eg), PwC Worldwide Tax Summaries (taxsummaries.pwc.com/egypt), or a Big-4 alert before filing.

What this file is

This file is a content skill that loads on top of a workflow base (here: income-tax-workflow-base). It provides Egypt-specific WHT rates, treaty reduction mechanics, compliance steps, and filing mechanics.

Tax year coverage. This skill is current for tax year 2025 as of its currency date.

The reviewer is the customer of this output. Per the base, this skill assumes a credentialed reviewer reviews and signs the return. The skill produces working papers and a brief, not a return.

Section 1 — Scope statement

This skill covers:

• Domestic WHT rates (non-treaty) for each payment category under Law 91/2005 Arts 56, 56 bis
• Double Tax Treaty (DTT) reduction mechanics — how to claim treaty rates with a Tax Residency Certificate (TRC)
• Key DTT partners for Egypt (UAE, KSA, UK, USA, Netherlands, France, Germany, Italy, Cyprus, Mauritius, Singapore, etc.)
• Compliance timeline — deduction, remittance (Form 41), annual reconciliation
• Penalties for late deduction/remittance (Art 110-111)
• Exemptions — participation exemption (dividends ≥10%/1yr), government bonds, Suez Canal, etc.

This skill does NOT cover:

• VAT reverse charge on imported services — see egypt-vat
• Personal income tax withholding on salaries (PAYE) — see eg-payroll
• Social insurance contributions — see eg-social-insurance
• Transfer pricing adjustments that recharacterise payments — see eg-transfer-pricing (planned)
• Free zone / special economic zone WHT holidays — escalate to licensed advisor

Section 2 — Filing requirements

Filing requirements (Law 91/2005 Arts 56, 56 bis, 57; ETA Decree 2023; ETA Circular 2022)

Item	Rule	Source
Who must withhold	Any resident person (company, branch, PE, individual) paying listed income to a non-resident	Law 91/2005 Art 56
When to deduct	At the earlier of: (a) payment date, (b) credit to account, (c) invoice date	Law 91/2005 Art 56
Remittance form	Form 41 (نموذج 41) — monthly WHT return	ETA Decree 2023
Remittance deadline	15th of the month following the month of deduction	Law 91/2005 Art 56
Annual reconciliation	Annual WHT statement filed with CIT return (30 Apr)	Law 91/2005 Art 57
Tax Residency Certificate (TRC)	Required to claim treaty rate — must be original, apostilled/legalised, valid for the tax year	ETA Circular 2022
No TRC = domestic rate	If TRC not provided at time of payment, apply domestic rate; refund claim possible within 3 years if TRC obtained later	Law 91/2005 Art 56 bis

Section 3 — Domestic WHT rates (non-treaty)

Domestic WHT rates (non-treaty) (Law 91/2005 Art 56(1)-(6))

Payment type	Rate	Legal basis	Notes
Dividends	10%	Law 91/2005 Art 56(1)	Exempt if recipient holds ≥10% for ≥1 year (participation exemption, Art 18 bis)
Interest	20%	Law 91/2005 Art 56(2)	Exempt: interest on Egyptian government bonds, Suez Canal Authority bonds, CBE bills
Royalties	20%	Law 91/2005 Art 56(3)	Includes patents, trademarks, designs, models, plans, secret formulas/processes, copyrights, software licences
Technical / management / consulting fees	20%	Law 91/2005 Art 56(4)	Broad definition — includes engineering, legal, accounting, marketing, administrative, financial advisory
Rental — movable property	20%	Law 91/2005 Art 56(5)	Equipment leasing, vehicle leasing
Rental — immovable property	20%	Law 91/2005 Art 56(5)	Real estate rent paid to non-resident
Capital gains — disposal of Egyptian shares/real estate	20% on gross proceeds (or 10% on net gain with documentation)	Law 91/2005 Art 56(6)	Applies to non-resident sellers of Egyptian assets

Section 4 — Treaty rates (key partners)

Treaty rates (key partners) (Egypt Double Tax Treaties; TRC per partner authority)

Treaty partner	Dividends	Interest	Royalties	Technical / consulting	TRC notes
UAE	5% (≥10% holding) / 10%	10%	10%	10%	Most-used treaty; UAE TRC from MoF
Saudi Arabia	5% (≥10%) / 10%	10%	10%	10%	KSA TRC from ZATCA
United Kingdom	5% (≥10%) / 15%	10%	10%	10%	UK TRC from HMRC
United States	5% (≥10%) / 15%	15%	15%	15%	US TRC from IRS (Form 6166)
Netherlands	0% (≥10%) / 10%	10%	10%	10%	NL TRC from Belastingdienst
France	5% (≥10%) / 15%	10%	10%	10%	FR TRC from DGFiP
Germany	5% (≥10%) / 15%	10%	10%	10%	DE TRC from BZSt
Italy	10%	10%	10%	10%	IT TRC from AdE
Cyprus	5% (≥10%) / 10%	10%	10%	10%	CY TRC from Tax Dept
Mauritius	5% (≥10%) / 10%	10%	12.5%	10%	MU TRC from MRA
Singapore	5% (≥10%) / 10%	10%	10%	10%	SG TRC from IRAS
China	5% (≥25%) / 10%	10%	10%	10%	CN TRC from STA
No treaty / TRC not provided	10%	20%	20%	20%	Domestic rates apply

AUDIT FLASH POINT — ETA audits WHT heavily. Common findings: (1) missing/invalid TRC, (2) misclassifying "technical services" vs "royalties", (3) late Form 41 filing, (4) interest on related-party loans recharacterised as dividends (thin cap + WHT interplay). Always verify TRC validity dates cover the payment period.

Section 5 — Compliance mechanics

Step 1 — Identify the payment

• Is the payer resident in Egypt? (incorporated in Egypt, managed/controlled in Egypt, or PE in Egypt)
• Is the recipient non-resident? (no PE in Egypt, not tax-resident)
• Is the payment listed in Art 56? (dividends, interest, royalties, technical/management/consulting fees, rental, capital gains on Egyptian assets)

Step 2 — Determine the rate

1. Check if a DTT exists between Egypt and recipient's country of residence
2. Obtain valid TRC from recipient (original, apostilled/legalised, covers the tax year)
3. Apply treaty rate if TRC in hand at payment date; otherwise apply domestic rate
4. Check exemptions: participation exemption (dividends ≥10%/1yr), government bonds, Suez Canal, etc.

Step 3 — Deduct and remit

• Deduct at earliest of payment/credit/invoice
• Calculate: WHT = Gross amount × applicable rate
• Remit via Form 41 by 15th of following month
• Pay via ETA e-payment portal (eta.gov.eg) or authorised banks

Step 4 — Record keeping

• Keep: invoice, contract, TRC copy, Form 41 receipt, bank payment proof
• Retain 5 years from end of tax year of payment

Step 5 — Annual reconciliation

• Include WHT summary in corporate tax return (30 Apr)
• Report: recipient name, country, TRC ref, payment type, gross, rate, WHT deducted, net paid
• Any over/under deduction adjusted via amended return or refund claim (3-year statute)

Section 6 — Edge cases and special rules

Edge cases and special rules (Art 49; Art 56; Art 56 bis; Law 91/2005 Art 40 ter; Art 18 ter, Law 5/2025; Law 83/2002, Law 173/2018; ETA Practice Note 2023; OECD Commentary)

Situation	Rule	Source
Related-party interest	Subject to thin cap (4:1 debt:equity) — excess interest non-deductible AND WHT applies on gross	Art 49 + Art 56
Royalty vs technical services	Royalties = IP licences; Technical = human-delivered services. Misclassification risk — ETA often reclassifies technical as royalty (20% vs 20% same rate but different treaty articles)	Art 56(3)-(4), OECD Commentary
Software payments	Shrink-wrap/standard licence → royalty (20%); Custom development/SaaS → technical services (20%); Treaty may distinguish	ETA Practice Note 2023
Branch remittance tax	No branch profits tax in Egypt — branch profits taxed at 22.5% CIT, remittance to head office not subject to WHT	Law 91/2005 Art 40 ter
Capital gains on listed shares (EGX)	Non-resident: exempt if held ≥1 yr; otherwise 10% on gain (with documentation) or 20% on gross	Art 18 ter, Law 5/2025
Free zone companies	Payments to free zone entities — WHT applies unless specific holiday granted	Law 83/2002, Law 173/2018
Refund of over-deducted WHT	File refund claim within 3 years of payment; requires TRC obtained post-payment	Art 56 bis

Section 7 — Self-checks

Before delivering output, verify:

• Payer is Egyptian tax resident (company, branch, PE, or individual)
• Recipient is non-resident (no Egyptian PE, not tax-resident)
• Payment type falls under Art 56 (div, int, royalty, tech/consulting, rental, cap gains)
• Correct domestic rate applied (10% div, 20% int/royalty/tech/rental)
• If treaty claimed: valid TRC on file covering payment date, correct treaty article cited
• Participation exemption checked for dividends (≥10% holding, ≥1 year)
• Form 41 filed by 15th of following month
• Annual WHT reconciliation included in CIT return (30 Apr)
• Related-party interest tested for thin cap + arm's length rate
• Records retained for 5 years (invoice, contract, TRC, Form 41, bank proof)

Section 8 — Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, Egyptian licensed tax accountant — محاسب قانوني, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.

The most up-to-date, verified version of this skill is maintained at openaccountants.com. Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.

Contributed by Ahmed Hassan.