Income Tax Law Amendment Concerning

On 20 February 2019, Law No. 10 of 2019[1] was issued amending the Income Tax Law No. 91 of 2005 (“ITL”).[2] At the time of its submission to the House of Representatives, the proposal containing this amendment was not welcomed by the Egyptian Federation of Banks due to its potential implications on the effective income tax rates incurred by the federation’s members. The amendment addresses Article 58(4) of the ITL, whereby, for income tax purposes, the returns/yields of banks from investing in treasury bills and bonds (“Treasury Revenues”) will be treated as a separate revenue separate from the general revenues generated by banks from their ordinary operations (“Ordinary Revenues”). Based on the amendment, for the purposes of calculating the income tax due on banks from trading in treasury bills and bonds, the costs/expenses incurred by banks as necessary to generate return from treasury bills and bonds will only be deductible from Treasury Revenues and not from Ordinary Revenues. After deducting the relevant costs/expenses, the net income from trading in treasury bills and bonds will become the taxable income that is subject to income tax at the rates provided in Article 58 of the ITL. In this respect, it is important to note that, the amendment only changes the means by which banks account for their revenues and costs from trading in treasury bills and bonds as well as their ordinary operations. The amendment does not therefore change the tax rates applicable to such incomes.   [1] Law No. 10/2019 amending certain provisions of Law No. 91/2005 on Income Tax, Official Gazette, Issue No. 7 (bis) (a), 20 February 2019. [2] Law No. 91/2005 on Income Tax, Official Gazette, Issue No. 23 (cont.), 09 June 2005.