Egypt Tax Refund: All You Need to Know

Diving into the realm of taxes in Egypt can be as mystifying as deciphering hieroglyphs for expats. Yet, securing a tax refund doesn’t have to be a puzzle.

This guide serves as your Rosetta Stone, translating complex tax policies into actionable knowledge.

Whether you’re a seasoned expat or newly arrived, understanding how to navigate Egypt’s tax refund system can lead to substantial financial benefits.

Let’s dive in!

What Is A Tax Refund?

Tax refunds are usually a cause for happiness. However, they usually imply that you overpaid income tax, which was an error. 

State or federal governments will reimburse you for any unused funds. 

You can prevent overpaying by accurately completing employee tax forms and amending or calculating deductions to ensure you pay the appropriate amount.

Why You Get a State and Federal Tax Refund

In cases where too much money is withheld from taxes, taxpayers receive a refund at the end of the year. 

If you overspend your projected taxes, self-employed individuals receive a tax refund. 

Although this additional income may seem like free money to you, it’s more akin to an interest-free loan you made to the IRS. 

On the other hand, if you underestimate the amount of taxes due, you will owe the government money.

What Are Refunds From Tax Credits?

While taxpayers usually forfeit their tax credits when they owe nothing, you may qualify for a tax refund. Here are the four most significant tax credits that could end up providing you with a refund:

  • Child tax credits: For 2023 and 2024, the child tax credit is worth a maximum of 61,798 EGP per dependent. 

It was higher in 2021, but that was a one-year bump due to the COVID-19 pandemic. Up to 49,439 EGP in 2023 and 52,528 EGP in 2024, this is refundable at a dollar-for-dollar rate.

  • Earned income tax credit: Taxpayers who earn low-to-moderate income may qualify for the Earned Income Tax Credit (EITC or EIC), which reduces the tax amount you owe and could entitle you to a refund.
  • Premium tax credit: Low to moderate-income households could qualify for a premium tax credit (PTC), lowering the overall cost of available health insurance. 

These health plans must be selected from federal or state exchanges. 

If you use less than what you qualify for, you could receive the balance in a refund.

What Is The Tax Refund Process?

You can ask the government for a tax refund by submitting an annual tax return. Your income, expenses, and other pertinent tax data are reported in this paper. 

It will assist you in scheduling tax payments, figuring out how much you owe in taxes, and getting a refund if you overpaid.

Before releasing your money, the government must formally approve your refund after receiving your tax return and processing your information.

The procedure of getting your tax refund differs based on how you file your taxes.

Although they may take up to 12 weeks to appear, refunds for electronically submitted tax returns are often issued at least 21 days after the IRS receives your information. 

Refunds typically take six to eight weeks for paper tax forms. “Why does my tax refund take so long to show up?” may be on your mind.

Budget cuts, errors, and overworked tax preparers can all lead to delays. 

It’s generally not a good idea to rely on a return to make a significant payment or purchase because the IRS’s timetables are estimates. 

You may occasionally feel pressured to apply for a loan in anticipation of a refund. Yes, your money will reach you sooner. 

However, you might have to pay a hefty fee and interest.

What Is Tax Refund In Egypt?

The Egyptian Ministry of Finance introduced, via a Ministerial Decree, value-added tax (VAT) guidelines for digital services and other remote services provided by nonresidents to customers based in Egypt.

The Guidelines outline the VAT obligations for nonresident service providers who render digital and remote services to customers in Egypt through various platforms (including websites, social media stores and applications).

Nonresident service providers who provide remote services to customers in Egypt should review the Guidelines carefully.

Moreover, they should take the necessary steps to comply with the simplified registration regime within six months from the Executive Regulations of Law No. 3 issuance date on 11 January 2023.

VAT rates and payment currencies

In general, the standard 14% VAT rate applies. However, the applicable VAT rate is 10% for professional and consultancy services

The acceptable currencies for VAT payment are Egyptian pounds (EGP) and the US dollar (USD), but other currencies will be acceptable starting December 2023.

Nonresident registrants under the simplified service providers registration regime cannot deduct any input VAT. 

However, they can apply for a refund to recover any input VAT they have incurred in Egypt concerning their taxable activity.

The revenue threshold for simplified registration for remote services shall be EGP500,000 for any 12 months. 

However, professional and consultancy services should be registered initially, irrespective of turnover.

Noncompliance with registration implications

In cases of noncompliance with the VAT registration requirements, the ETA will contact the nonresident service providers.

If no response is received, the ETA may commence a risk review, which may result in the ETA’s taking the following steps:

  • Registering nonresident service providers for Egyptian VAT online on their behalf and sending them an assessment of their liability based on ETA calculation with additional penalties
  • Registering the debt in a court in the country of the nonresident supplier

What Is The Difference Between Tax Return And Tax Refund?

The two terms sound similar and are sometimes conflated — someone might mistakenly mention that their “tax return” has been deposited in their bank account. 

However, a tax return and a tax refund are different things, and it’s an important distinction to know.

A tax return is a form you file annually with the IRS that gives your adjusted gross income, or AGI, expenses and other financial information. 

Most of these details come from your W-2 statement, which your workplace provides you weeks in advance so you can file your taxes, but you might also have a 1099 or other form for recording your income. 

Your tax return will include your gross income, how much you’ve already paid toward taxes and other important information you’ll need to file your taxes.

Through your company’s withholding or estimated taxes that you prepaid if you’re self-employed.

However, the tax return will also include deductions for your kids, how much you paid in student loan interest, health care coverage, Roth IRA contributions, home office expenses, business expenses and charitable donations. 

You must file a tax return to get a refund. However, you may still get a tax refund even if you’ve filed a return. 

A tax refund is what’s issued to you by the government if, in the previous year, you paid more in state or federal taxes than you needed to. 

For example, maybe you withheld more money than was needed from your paycheck, or you’re self-employed and overpaying quarterly estimated taxes. 

The government will reimburse you the difference between what you paid (in your tax return) and what you owed as a lump sum payment. 

Also, any deductions you claim on your taxes can add to the amount you expect to receive. 

Conclusion

As our journey through the sands of Egypt’s tax system concludes, it’s clear that with the right information and approach, securing a tax refund is not only possible but can be a smooth process.

Remember, the keys to success are thorough preparation and staying informed. So, arm yourself with this guide and embark on your quest for a tax refund with confidence. May your finances flourish in the land of the Pharaohs.

Prosperous navigating!

But wait, there’s more! You might also be interested in the following:

  • Tax Number in Egypt: An Expats Guide
  • Church Tax in Egypt: A Simple Guide
  • Income Tax brackets in Egypt: Explained

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