Egypt creates new window of opportunity to fulfil TP compliance requirements

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Egypt creates new window of opportunity to fulfil TP compliance requirements

Sponsored by

Saleh, Barsoum & Abdel Aziz – Grant Thornton Egypt logo.png
Egyptian flag

Nouran Ibrahim and Mahmoud Ashraf of Saleh, Barsoum & Abdel Aziz – Grant Thornton Egypt say taxpayers required to submit transfer pricing documentation could avoid penalties by acting in response to a recently published law

Egyptian Law No. 5 of 2025, which is part of the ‘tax facilitation package’ set to be implemented from this year, was published in the Official Gazette on February 12 2025. The law concerns the regularisation and settlement of the tax status of certain taxpayers, including those that have not submitted their tax returns for any period from 2020 up to the period prior to the law's effective date, and those that have submitted their tax returns but need to amend them due to oversight, error, or omitted data.

This article summarises Article 3 of Law No. 5 of 2025 and considers the implications of delayed/ non-submission of transfer pricing (TP) documentation reports for financial years from 2020 up to the period prior to the law's effective date.

Background

Article 13 of the Unified Tax Procedures Law (UTPL) for 2020 introduced TP-specific penalties that range from 1% to 3% of the value of the intercompany transactions in which a taxpayer engaged within the relevant taxable year for:

  • Non-disclosure of the related-party transactions in the annual income tax return; and

  • Failure to submit the master file, the local file, or the country-by-country (CbC) report/notification within the specified deadlines.

Article 3 of Egyptian Law No. 5 of 2025

Article 3 of the law addresses certain aspects of TP compliance requirements; specifically:

  • Non-filing of TP documentation – taxpayers that have not submitted their TP documentation (i.e., a master file, a local file, and a CBC report/notification) for any tax period from FY 2020 up to the period prior to the effective date of this law have the right to submit their documentation within six months from the law's effective date; and

  • Amendment of TP documentation or tax returns – taxpayers that have submitted their TP documentation or corporate income tax returns for the aforementioned tax periods have the right to submit amended returns in the case of oversight, error, or omitted data, without incurring delay fines or additional tax.

Consequently, the penalties stipulated in the UTPL will not apply, provided that the aforementioned returns/TP documentation stipulated in this article are submitted within six months from the law’s effective date.

TP implications – checkpoint

Tax functions should ask themselves the following questions to facilitate compliance:

  • Has the corporate tax return (CTR) transfer pricing disclosure been filled in correctly? Schedule 508 of the CTR transfer pricing disclosure should be checked in this regard.

  • Has all the three-tiered TP documentation been filled in? Have all the data, sections, and information requirements, as well as the rules, been fulfilled?

Recommendations

Based on Article 3 of Law No. 5 of 2025, the following actions are recommended:

  • Tax functions are strongly advised to expedite the preparation of any TP documentation for the period from 2020 up to the period prior to the law’s effective date that has not been submitted within the legal deadlines, and within the timeframe specified in Law No. 5; and

  • Schedule 508 in the CTR, related to the disclosure of related-party transactions, should be completed or amended, if it is incomplete or contains errors.

Taxpayers should take advantage of the waiver of financial penalties and sanctions stipulated in the law, provided that the required returns and documentation are submitted within six months from the law’s effective date.

Key takeaway for taxpayers

The tax facilitation package assists taxpayers in regularising their tax status and avoiding penalties. Companies operating in Egypt should make every effort to utilise the provisions.

more across site & shared bottom lb ros

More from across our site

Wim Wuyts, who had been head of the specialist tax network since 2017, is moving on to a new role with WTS’s Belgian member firm
MNEs are increasingly using algorithmic tools in TP. Sahasranshu Dash argues that data ethics should therefore plug directly into the TP design process
The Institute of Chartered Accountants in England and Wales also queried whether HMRC resources could be better spent scrutinising larger entities
Grant Thornton’s Austria tax head likens his practice to an escape room, shares his football coaching ambitions, and explains why tax is cool
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 EMEA Tax Awards
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 Asia-Pacific Tax Awards
The fates of pillars one and two hang in the balance after the US successfully threw its weight around in G7 and Canadian negotiations
Rafael Tena tells ITR about the ‘crazy’ Mexican market, ditching the hourly rate, and refusing to grow his fledgling firm in an ‘unstructured way’
It should be easy for advisers to be transparent about costs, Brown Rudnick partner Matthew Sharp said in response to exclusive ITR in-house data
The sprawling legislation phases out Joe Biden-era green tax incentives for businesses; in other news, the UK will reportedly maintain its DST despite US pressure
Gift this article