Fixed Income Tax
Tax Definition

This is an annual income tax levied on every practitioner of industrial or commercial profession who can not keep regular accounting records. In case the taxpayer’s business grows, he can be shifted to the category of real profits and vice versa.

Tax imposition and Collection
The tax is realized at the beginning of the year for all fixed income taxpayers. The tax is collected at the beginning of the yea. For newly classified taxpayers starting business within the year, the tax is collected as of the month following the launch month, and collection is effected within the same year or later. And since the classification period, for fixed income category, is five years. Thus the re-classification of the taxpayer is done after this period, that is issuing a new resolution determining a new amount for the tax which could be higher or lower. In case the financial administration was delayed in issuing the relevant resolution, then the periods overlap, and complimentary realizations are issued within the year covering the differences between old and new collection resolutions made during the year.

Exonerations and Fines
The realizations of the current year, complimentary and differences from earlier years which bare issued during the first four months of the current year and which are due for collection within the first four months of the year, benefit from a discount of 4% if settled within the first and second months of the current year, 3% if settled within the third and fourth months or the current year. They do not benefit from any discount and are not subject to any fine if settled within the fifth and sixth months.
The fines are due starting from the seventh month at 5% with an increase of 1% per month until 10% at the last month of the current year. Then it is increased by 10% at the beginning of the next year and the year after, up to a maximum of 30%. The realizations issued after the first four months of the year do not benefit from discount. The fine starts at the beginning of the next year at 10% and increase annually to a maximum of 30% after 3 years.

General terms on Fixed Income Tax
1. The classification period is 5 years, starting from the year the taxpayer starts business. It is permissible to get re-classified two years after levying when necessary and upon circumstances determined by the Ministry of Finance, particularly in case the taxpayer’s outputs increase or decrease by more than 25%, or by decision from the Minister of Finance for certain professions or certain taxpayers.
2. Each taxable is an independent unit. This means that if the taxpayer owns more than one shop or practices more than one activity at various locations, a separate levying decision will be issued for each location. This means, tax levying is upon the taxable rather than the taxpayer, and the latter will have more than one classification decision. The levying of this taxpayer shall be on the difference of increasing taxation by totaling the tax amounts of all decisions and then deduct the same from the tax due on this taxpayer in the event that he was taxed by profits decision equal to the sum of all the profits of the decisions relevant to the taxpayer.
3. An amount of SP 36,000 is exonerated from the net profits for every working partner in joint liability and simple partnership companies as well as all individual taxpayers. The exonerated amount shall be SP 5000 if the taxpayer is practicing a scientific professions: doctor, engineer or lawyer, and also against each public vehicle in vehicle levying.
4. The taxpayer has the right to object against his classification decision within 30 days from fate of notification, by forwarding a letter of objection to the financial administrations detailing reasons for objection to his classification. He shall deposit an amount of 10% of assigned annual tax (not exceeding SP 500), to be refunded in case his objection was accepted, otherwise will be forwarded to treasury income. The first resolution is termed preliminary and the second resolution is termed appeal resolution, which is final and not subject to objection nor review.
5. The objection does not stop collection. The taxpayer must settle realized amounts even if he objected to the classification resolution. In case his objection was accepted and the tax amount was reduced, the difference is either returned or can be used by the taxpayer for settling other taxes due on him or on others.
6. The fixed income tax depends on estimation of the net annual profit of the taxpayer, thus the procedures and instructions issued by the Ministry of Finance define the bases and guidelines that should be adopted by classification committees and income supervisors in order to reach the correct and fair information for both sides: the Ministry and the taxpayer.
The classification committees, upon direct statement from the taxpayer or upon discovery of a new taxpayer via tax inquiry, will visit the taxpayer’s workplace and review his activities by observation and also by asking him or requesting some documents and official papers such as water and electricity bills, invoices, purchase orders from public sector, .. And afterwards the committees will estimate the volume of his business and expenses in order to reach the annual net profit of all taxpayer activities at this location, which will be used to calculate his due tax.
7. The fixed income tax on profits of public vehicles are levied on individual basis (each car is a separate unit equivalent to the taxable of profession taxpayers). A central classification committee formed in a resolution by the Minister of Finance shall set up levying tables, based upon the regulations that are set by the Minister of Finance, taking into consideration to deduct SP 36000 fro the net profits for each vehicle, in addition to reduction of net profits by 5% annually starting from the sixth year since manufacture.

General Directions for taxpayers
1. The taxpayer shall inform the financial administrations within 30 days from start of profession or trade that is subject to tax, or change of location, or stopping the practice, or adding new activity to his business, or the opposite or total or partial transfer of the establishment or withdrawal of a partner, .. etc
2. The taxpayer must submit to the financial administrations at the end of the five-year classification period, and at the beginning of the year a statement that clarifies his activities, volume of business and net profits. Failure to submit this statement will entail a fine of 10% of the tax due for the period from the due date of the statement and the date of actual submission of the same, or date of the visit by the committee in case the statement was not submitted.
3. Each taxpayer should settle the due tax at the beginning of the year in order to benefit from the given discount and avoid delay fines.
Required Papers, Documents and Statement
1. Statement of commencement at the start of business.
2. Statement of leave when the property of the establishment is transferred to others.
3. Request for re-classification after two years from date of classification, in case the activities of the taxpayer increased or decreased by more than 25%.
4. Documents that are requested by levying committees such as lease contract, electricity and water bills.
5. For certain professions and based on a decision by the Minister of Finance, the taxpayers of such professions are requested to sign certain records at the beginning of the year. The violator shall be subject to a fine of 50% of the tax and for one year only.
6. The tax due on the taxpayer is calculated based upon his estimated net profits, and according to the following table of tax segments:
- Net profit: 0- SP 200,000, tax rate 10 %.
- Net profit: 200,001- SP 400,000   tax rate 15 %.
- Net profit: 400,001- SP 700,000   tax rate 20 %.
- Net profit: 700,001- SP 1000,000   tax rate 23 %.
- Net profit: 1,000,001- SP 2,000,000   tax rate 26 %.
- Net profit: 2,000,001- SP 3,000,000   tax rate 29 %.
- Net profit: > SP 3,000,000    tax rate 35%.
Added to this tax percentage, 2% of the tax as estimation expenses, in addition to the contribution to local administration expenses to be decided by Governorates councils at the beginning of the fiscal year.