ETA Calls Entrepreneurs to Obtain the Project Classification Certificate
The Egyptian Tax Authority (ETA) calls entrepreneurs to obtain a Project Classification Certificate from the Egyptian Micro, Small, and Medium Enterprises Development Agency (MSMEDA). This certificate allows entrepreneurs to benefit from unprecedented tax benefits and facilities, as stipulated by Law No. 152 of 2020.
Overview of MSME Law
According to Law No. 152 of 2020 regarding the development of medium, small, and micro-enterprises, taxes are either fixed or proportional based on the annual business turnover, without any invoices, documents, or books.
The business turnover is determined through the declaration of the project owner, and the tax rate for registered small and micro projects after the issuance of the law is determined based on the value of the business turnover for a period of five years.
-If the annual turnover is less than EGP 250,000, the applicable tax will be EGP 1,000.
-If the annual turnover is more than EGP 250,000 and less than EGP 500,000, the applicable tax will be EGP 2,500.
-If the annual turnover is more than EGP 500,000 and less than EGP 1 million, the applicable tax will be EGP 5,000.
-If the annual turnover is more than EGP 1 million and less than EGP 2 million, the applicable tax will be 0.5% of the value of the turnover.
-If the annual turnover is more than EGP 2 million and less than EGP 3 million, the applicable tax will be 75% of the value of the turnover.
-If the annual turnover is more than EGP 3 million up to EGP 10 million, the applicable tax will be 1% of the value of the turnover.
Tax Benefits and Facilities for Entrepreneurs
Dr. Fayez El-Dabaani, the head of the Egyptian Tax Authority, stated that there is a range of incentives and benefits, both tax-related and non-tax-related, that medium, small, and micro-entrepreneurs can obtain by getting a Project Classification Certificate according to Law No. 152 of 2020.
He mentioned that among these benefits are exemption from stamp duty, documentation fees for contracts of establishing companies and registering the necessary lands for project establishment. Additionally, there is an exemption from capital gains tax resulting from disposing of assets, machinery, or production equipment if the proceeds from the sale are used to purchase new assets and production equipment within one year from the date of the transaction after reconciling the project’s status and obtaining the final license.
He further added that the law has stipulated the suspension of all tax claims and administrative reservations related to projects that have obtained temporary licenses until their tax liabilities are settled by the provisions of Law No. 152 of 2020, noting that there is tax amnesty for tax liabilities for previous years upon submitting a request to reconcile the status for projects that are not tax-registered during the period of the law’s implementation. Furthermore, they can benefit from simplified tax, and there is an exemption from keeping books, records, and documents required by the Income Tax Law, which can be replaced with simplified books and accounts.
Steps You Should Follow to Obtain the Project Classification Certificate
The Medium, Small and Micro-Enterprise Development Fund have announced the steps to be taken by existing entrepreneurs to obtain the Project Classification Certificate in accordance with the implementing regulation of the Act on the Development of Medium, Small and Micro-Enterprises (Act No. 152 of 2020). This will allow entrepreneurs to benefit from the various facilities and new benefits offered by the fund or various State agencies involved in this sector. The steps are as follows:
1-Head to any fund branches in the governorates to apply for a Project Classification Certificate or online through the site.
2- Choose “Access the services of the Act on the Development of Medium, Small and Micro-Enterprises No. 152 of 2020.”
3- Complete the application, information, and the requested papers, which contain the data for the project, the type of activity, and the applicant’s data for a Project Classification Certificate.
4-Log in later to “check the request” to follow up on the application status that indicates to the applicants if the application was accepted or if other data needs to be updated.
We have now shown all tax benefits and facilities offered to entrepreneurs by obtaining the Project Classification Certificate by Project Development Act No. 152 of 2020. To learn more about these tax benefits, click here.
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