Expat Tax Guide for Americans Living in Egypt
- Living as an Expat in Egypt
- Egypt at a Glance
- What Are Expat Taxes like for Americans Living in Egypt?
- Who Has to File Taxes in Egypt?
- Who Qualifies as a Tax Resident in Egypt?
- What Types of Taxation Does Egypt Have?
- When Are Taxes Due in Egypt?
- Essential Tax Forms for US Expats in Egypt
- Does the US Have a Tax Treaty with Egypt?
- Does the US Have a Totalization Agreement with Egypt?
- Navigating Tax Compliance for US Expats in Egypt
Living as an Expat in Egypt
Egypt is a country full of history, culture, and adventure. Living as an expat in Egypt can be an exciting experience for those who are willing to adapt to a new lifestyle. Some of the main reasons why expats choose to live in Egypt include the affordable cost of living, warm climate, and the opportunity to immerse themselves in a unique culture. Cairo, the capital city, is the most popular destination for expats due to its vibrant atmosphere and abundance of job opportunities.
However, it’s important to keep in mind that Egypt is a developing country with its own set of challenges, such as language barriers, traffic congestion, and political instability. Nevertheless, if you’re looking for an adventure and a chance to explore a country rich in history and culture, Egypt may be the perfect place for you to call home as an expat.
But what taxes can you expect as an American living in Egypt? In this guide, we’re going to look at the expat taxes for US citizens in Egypt.
Egypt at a Glance
- Primary Tax Form for Residents: Form 160
- Tax Year: January 1–December 31
- Tax Deadline: March 31
- Currency: Egyptian pound (EGP)
- Population: 107.7 million
- Number of US Expats: Estimated 6,000
- Capital City: Cairo
- Primary Language: Arabic
- Tax Treaty: Yes
- Totalization Agreement: No
What Are Expat Taxes like for Americans Living in Egypt?
When talking about Egyptian expat taxes, it’s worth noting that Americans living in Egypt still have to file a US tax return every year. All US citizens are required to file an annual return regardless of where they live. Whether you live in Cleveland or Cairo, the IRS needs to know the details of your income.
And as a resident of Egypt, you will probably also have to file an Egyptian tax return. The good news is that Egypt’s tax rates are low for locals and foreigners alike.
Who Has to File Taxes in Egypt?
Egypt uses a residence-based taxation system. This means that residents of Egypt are taxed on their worldwide income, while non-residents are taxed on income that comes from an Egyptian source.
For employment income received from an Egyptian employer, income taxes will be withheld at the source, and there is no need to file a separate annual tax return. You would only need to file a tax return if you received some other form of taxable income, such as:
- Foreign Income
- Self-employment income
- Rental income
Who Qualifies as a Tax Resident in Egypt?
The Egyptian government will consider you a resident for tax purposes if any of the following are true:
- You are present in Egypt for at least 183 days in any twelve-month period (these days do not have to be consecutive)
- You have a permanent home in Egypt
- You have a local commercial presence in Egypt
If you do not meet any of these standards, you will be considered a non-resident for tax purposes.
What Types of Taxation Does Egypt Have?
Egypt taxes residents’ worldwide income at progressive rates ranging from 0% to 25%. (All amounts are given in EGP.) in the table below, you can see current Egyptian income tax rates.
|Income (EGP)||Tax Rate|
|0 – 15,000||0%|
|15,000 – 30,000||2.5%|
|30,000 – 45,000||10%|
|45,000 – 60,000||15%|
|60,000 – 200,000||20%|
|200,000 – 400,000||22.5%|
|400,000 and over||25%|
Non-residents are taxed at the same progressive rates as residents. However, unlike residents, non-residents are only taxed on their Egypt-source income.
Residents and nonresidents can claim an annual salary tax exemption of 9,000 EGP.
Capital gains generated from property sales are only taxed if the real estate was used in a trade or business (including a sole proprietorship). Otherwise, capital gains are not taxed.
A 2.5% transfer tax applies to selling any built real estate or land prepared for building. The value of the sale is assessed on the total disposal value of the property.
Egypt imposes a stamp tax on certain documents, such as:
- Legal forms
- Banking transactions
- Insurance premiums
The rate for this tax varies depending on the type of document. For example, the rate for banking transactions is 0.04%, while the rate for insurance premiums ranges from 0.08% to 10%.
Real Property Tax
All property in Egypt is subject to a real estate tax. The rate for this tax is 10% on the annual rental value after a 30% deduction for residential property or a 32% deduction for nonresidential property. Residential units with a rental value of less than 6,000 EGP are exempt.
Egypt applies a value-added tax (VAT) to certain goods and services. The standard rate for this tax is 14%. Some goods and services are subject to a reduced rate of 5%. Others are exempted entirely.
Corporate income is taxed at a flat rate of 22.5%. This applies to the net taxable profits of the company. The only exception to this is oil exploitation companies, which are taxed at 40.55%.
Egyptian corporations are generally taxed on their worldwide income, while foreign companies operating in Egypt are only taxed on income derived from Egypt.
When Are Taxes Due in Egypt?
Like the US, Egypt’s tax year is aligned with the calendar year. The tax year begins on January 1 and ends on December 31. Annual tax returns are due by March 31. However, if your only source of income is employment income from an Egyptian employer, your income tax will be withheld at the source, and you will not have to file a return.
Essential Tax Forms for US Expats in Egypt
As a US expat living in Egypt, you may be required to file a US income tax return as well as meet the tax obligations in Egypt. The primary tax form for reporting income in Egypt is the Annual Tax Return Form, which is used to report income and deductions for the previous tax year. The filing deadline for this form is typically March 31st but may be extended in certain circumstances.
In addition to the Annual Tax Return Form 1040, US expats may also need to file the Foreign Bank Account Report (FBAR) if they have a foreign bank account with an aggregate balance of $10,000 or more at any point during the tax year.
It’s important to stay up-to-date with the tax requirements in both the US and Egypt to avoid any penalties or fines.
Does the US Have a Tax Treaty with Egypt?
Yes. The US-Egypt tax treaty defines which country an expat will owe income taxes to, removing the risk of double taxation. Typically, whichever country claims you as a resident for tax purposes will retain the right to tax your income.
Under this treaty, certain types of income may be exempt from taxation in one country or the other or may be subject to reduced rates of taxation. The treaty also provides for procedures to resolve disputes between the two countries regarding the application of the treaty.
US expats living in Egypt should consult with a tax professional to determine their tax obligations under this treaty, as well as any other reporting requirements they may have in both the US and Egypt. It’s important to stay compliant with tax laws in both countries to avoid any penalties or fines.
Does the US Have a Totalization Agreement with Egypt?
No. The US and Egypt have not signed a totalization agreement. Expats are not required to contribute to the Egyptian social security system since the system only applies to Egyptian nationals.
Navigating Tax Compliance for US Expats in Egypt
After reading this guide, you should better understand how Egypt’s tax policies impact US expats. If you still have questions, our team of tax experts is here to help. We can even prepare and file your expat tax return on your behalf.
Contact us, and one of our customer champions will gladly help. If you need very specific advice on your specific tax situation, you can also click below to get a consultation with one of our expat tax experts.