Expat Tax Guide for Americans Living in Egypt

Living as an Expat in Egypt

Egypt is home to thousands of Americans living abroad. With friendly locals and a warm climate, it’s no surprise US expats would set their sights on this North African country. 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.

Egyptian Taxes at a Glance

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?

Income

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.

Non-residents are taxed at the same progressive rates as residents. However, unlike residents, non-residents are only taxed on their Egypt-source income.

Capital Gains

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.

Transfer Tax

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.

Stamp Tax

Egypt imposes a stamp tax on certain documents, such as:

• Legal forms
• Deeds
• 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.

Value-Added Tax

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 Tax

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.

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.

Does the US Have a Totalization Agreement with Egypt?

No. The US and Egypt have not signed a totalization agreement. However, the Egyptian social security system only applies to Egyptian nationals, so expats are not required to contribute to the system anyway.

Need to File an Expat Tax Return? Get Help ASAP!

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.