Transfer Pricing — Egypt
As a result of the increasing importance of international business in general and transfer pricing in particular, Egypt introduced for the first time clear provisions in the Income Tax Law no. 91 of 2005 (ITL 2005). These provisions concern thin capitalization and transfer pricing.
Transfer pricing in Egypt is governed by Article 30 of the ITL 2005 and its executive regulations, article 39. As well as strictly in accordance with Ministerial decree No. 221 of 2018. Furthermore, articles 12 and 13 of the Unified Tax Procedures Law no. 206 of 2020 (UTPL 2020) provide specific measures for TP filing and documentation. Article 30 of the ITL 2005 stipulates that, where charges for exchanges of goods and services and financial transactions between associated enterprises should be consistent with the arm's length prices charged for similar transactions that are carried out between independent enterprises.
In late 2018, the Egyptian Tax Authority (ETA) published its Transfer Pricing Guidelines, which introduced a three-tiered approach to transfer pricing documentation in line with the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13 requirements, modernizing the landscape of transfer pricing compliance in Egypt.
Transfer Pricing Requirements
Details regarding the overarching transfer pricing compliance and filing requirements in Egypt, aligning with the ETA guidelines.
Local File
Taxpayers engaging in transactions with related parties whose total value exceeds the established threshold must prepare and maintain a Local File detailing their intercompany transactions.
Master File
A Master File must be prepared in accordance with the ultimate parent entity's global operations, outlining the MNE's organizational structure, supply chain, and overall transfer pricing policy.
Country by Country Reports
Information on CbCR filing requirements for multinational enterprise groups meeting the consolidated revenue threshold set by the Egyptian Tax Authority.
Database Guidelines
Guidelines and accepted practices for utilizing external benchmarking databases to perform comparability analysis under Egyptian TP rules.