Income Tax Litigation: Protecting Corporate Earnings

Corporate Income Tax in Egypt is subject to intense audit cycles. Litigation often arises from the ETA's refusal to recognize certain "Business Expenses" or "Capital Depreciations," leading to inflated taxable income figures.

The Judicial Phase

Once a dispute moves beyond the Appeal Committee, it enters the First Instance Tax Court (Mahkamat Al-Qada' Al-Idary - Tax Circuit). Here, the role of the court-appointed "Tax Expert" is decisive. Legal strategy must focus on providing the expert with a clear, technically sound rebuttal of the ETA's audit findings.

Transfer Pricing Risks

For multinational corporations, transfer pricing is a high-risk area. The ETA increasingly scrutinizes inter-company transactions. Litigation defense requires demonstrating that transactions with foreign affiliates were conducted at "Arm's Length," using recognized OECD-aligned valuation methods.

Practical Consequences

Failure to litigate incorrect assessments sets a dangerous precedent for future tax years. Under Egyptian law, an un-challenged assessment can be used by the ETA as a "Historical Basis" for estimating income in subsequent audits, making defense of the current year a strategic priority for long-term fiscal stability.