Co-Founder & Partner at ElAttar Law firm, Egypt
The United Arab Emirates (UAE) is a thriving hub for company formation, investment opportunities, and banking solutions, attracting entrepreneurs and investors worldwide. Known for its tax-friendly environment, strategic location, and robust business infrastructure, the UAE has become a hotspot for residency by investment and establishing offshore companies.
Egyptian investors, like their global counterparts, are actively engaging in this trend, obtaining UAE residency and setting up businesses in sectors ranging from real estate to financial services. However, many overlook a critical factor: their tax obligations in Egypt. As Egyptian nationals, they remain subject to Egyptian tax laws, even while residing and investing abroad. Ignoring these obligations can lead to serious financial and legal repercussions—after all, fire often begins with tiny sparks.
In this article, we’ll explore how the Egyptian taxation system applies to individuals and companies operating in the UAE, highlighting key legal considerations for tax compliance and avoiding dual taxation.
Egypt’s Income Tax Law No. 91 of 2005 defines several scenarios where individuals are considered residents for tax purposes, and therefore liable to Egyptian taxes:
The Minister of Finance’s Decision No. 991 of 2005 further clarifies "permanent residence," stating that individuals with businesses, such as retail shops, offices, or factories, or those spending most of the year in Egypt, are considered tax residents.
Under Egyptian law, companies are also subject to taxation based on their operational and administrative presence:
Ministerial Decision No. 991 of 2005 specifies that a company is deemed to have its "actual administration" in Egypt if:
To address potential overlaps, Egypt and the UAE signed a Double Taxation Avoidance Treaty in 1981, which plays a critical role in defining tax liabilities:
For Individuals:
For Companies:
From the legal framework above, Egyptian investors and entrepreneurs operating in the UAE should consider the following:
For Egyptians investing or setting up companies in the UAE, understanding the intersection of UAE corporate law and Egyptian tax regulations is essential. Here are some tips to avoid pitfalls:
With Egypt’s taxation system becoming increasingly automated, Egyptian nationals and companies must ensure compliance to avoid allegations of tax evasion. The automation process allows the authorities to track income, property, and corporate operations more effectively, leaving little room for oversight.
Egyptians are known for their entrepreneurial spirit and effective business acumen. However, overlooking these tax implications can result in unexpected liabilities and reputational risks. By addressing these small yet significant details, Egyptian investors can secure their operations and avoid legal complications.
Navigating the complexities of cross-border taxation, company incorporation, and legal compliance requires expert advice. Whether you're an entrepreneur launching a startup in Dubai, an investor managing real estate portfolios, or a business owner seeking tax optimization solutions, partnering with experienced professionals ensures your success in both Egypt and the UAE.
As the saying goes, "fire is a result of tiny sparks." Paying attention to these details early on can prevent major financial and legal consequences later.
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