As part of efforts to safeguard tax revenues from evasion or avoidance practices, the Egyptian tax legislator has introduced penalties for tax evaders and incentives for those who Whistleblowing tax evasion.
The objective is to protect the Egyptian tax community from corruption and any actions aimed at evading or avoiding taxes.
These whistleblowing incentives were recently established through Law No. 30 of 2023, following a series of decisions aimed at combating tax evasion in line with global economic and tax developments.
The legislative journey started with Article 133 of Law No. 91 of 2005, which underwent multiple amendments across four stages until the issuance of Unified Tax Procedures Law No. 206 of 2020 and Law No. 30 of 2023.
Article 11 of Law No. 30 of 2023 outlines financial incentives for whistleblowing tax evasion.
It allocates a portion of late payment or additional tax, not exceeding 10%, to be distributed among informants and their assistants involved in detecting or reporting tax evasion, excluding authority employees. This whistleblowing incentive becomes due upon the taxpayer's payment of the tax.
Furthermore, the law identifies various tax evasion methods as mentioned above, and the corresponding penalties, e.g.:
Anyone evading tax payments faces imprisonment ranging from six months to five years, along with a fine equivalent to the unpaid taxes, according to the law. Tax evasion includes providing false information, hiding financial records, forging documents, or concealing taxable activities. These actions are considered violations of integrity and honesty.
The compensation value in the reconciliation varies depending on the stage of tax evasion. For example:
- In the first stage (the study stage before referral to the court), the compensation rate is 100% of the tax liabilities. However, upon referral to the court.
- The compensation rate for reconciliation is 150% of the tax liabilities. Following the court's judgment.
- The compensation for reconciliation (compensation rate) is 175% of the tax liabilities.
Submitting a reconciliation request does not signify the closure of the tax evasion case. Instead, it initiates a process where the taxpayer's case is reviewed, and if deemed eligible, reconciliation is accepted by the competent authority.
In Conclusion
the adoption of penalties for tax evasion and the provision of incentives for Whistleblowing such behavior underscores the Egyptian government's dedication to safeguarding tax revenues and upholding the integrity of the tax system. Through Whistleblowing initiatives like Law No. 30 of 2023 and preceding legislative actions, Egypt demonstrates its commitment to effectively combatting tax evasion in alignment with international standards and economic realities. These measures not only serve as deterrents against fraudulent tax practices but also encourage collaboration in identifying and addressing instances of tax evasion. By prioritizing transparency, accountability, and compliance, Egypt aims to cultivate a tax environment that fosters fairness and sustainability in economic growth, Being with a tax partner like Andersen Egypt protects you from incorrect tax practices that may lead to falling into errors classified as tax evasion, punishable by Egyptian law.
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