Failure to Submit Annual Return

Effective 20 October 2020, the following penalties are introduced in case of income tax return violations (including salary tax return, VAT):

A penalty of EGP 3,000 to EGP 50,000 for failing to submit a return where the delay does not exceed 60 days; and
A penalty of EGP 50,000 to EGP 2 million for failing to submit a return where the delay exceeds 60 days.

In case of repeated violations, taxpayers may also be subject to imprisonment for 6 months to 3 years. This may apply where a taxpayer fails to submit 3 annual returns or 6 monthly returns.

See Sec. 12.4.3. for specific transfer pricing penalties.

On 11 September 2024, the Egyptian Ministry of Finance announced an integrated and streamlined tax system whereby penalties for delayed filing or corrections made to tax returns filed for the years 2020 to 2023 will be waived for small taxpayers with annual turnover not exceeding EGP 15 million.

Further, a 6-month window is provided for filing overdue tax returns or revised returns for the year 2020 onwards.

Inaccurate or Incorrect Disclosure

Effective 8 May 2020, Egypt introduced new penalties for tax return differences. Where the final tax payable exceeds the amount declared in the tax return, penalties apply at the following rates:

20% if the difference is less than 50%; and
40% if the difference is equal to or more than 50%.

A penalty of 40% of the assessed tax will apply where the tax return was not filed.

The penalties may be reduced by half if an agreement is reached between a taxpayer and the tax authority without initiating appeal procedures.

Late Payment

Egypt imposes an interest penalty on late payments based on the credit and discount rate set by the Central Bank plus 2%. It is clarified that effective from 5 August 2019, the interest on unpaid taxes is to be calculated from the day following the respective tax return deadline until the day before the payment of interest.

Further, penalties ranging from EGP 20,000 to EGP 100,000 may apply in case of non-compliance other than non-filing of tax returns.

Effective 20 October 2020, the following new penalties are introduced in case of violation in tax payment rules, which may be increased in case of repeated violations:

A penalty of EGP 3,000 to EGP 50,000 for failing to pay the tax due, where the delay does not exceed 60 days; and
A penalty of EGP 50,000 to EGP 2 million for failing to pay the tax due where the delay exceeds 60 days.

Effective 13 February 2025, penalties for late payment of taxes are capped at the original amount of tax payable for all taxpayers (previously applied only to small taxpayers with annual turnover not exceeding EGP 15 million from 11 September 2024).

Tax Evasion and Fraud

Cases of tax evasion and fraud in Egypt can result in imprisonment as well as a penalty equivalent to the amount of underpaid tax.

Effective 13 February 2025, the Unified Tax Procedures Law is amended to include:

An out-of-court settlement mechanism that allows taxpayers to pay a reduced indemnity to avoid criminal prosecution in tax matters, which is set at between 50% and 200% of the legal fine; and
In case of ongoing legal proceedings, taxpayers are allowed to negotiate a compensatory payment equal to:

1.5 times the minimum fine if before a judgment;
3 times the minimum fine if after judgment but before final conviction; and
4 times the minimum fine if after conviction.

The executives (i.e., partner, managing director, board members, and others) of a company may be held legally liable in cases of tax evasion. In such cases, they must prove their lack of knowledge of any incidents of tax evasion to avoid tax payable.

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