Can I Claim Dividends Paid to Owners as a Business Expense in Egypt?
No. A dividend is a distribution of profit, not a cost, and it carries its own 10% tax. Finn records it against retained earnings and tracks the tax withheld.
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What Egyptian Tax Authority (ETA) says
Dividends distributed by a company carry a 10% tax under Article 56 bis of the Income Tax Law (Law 199 of 2020), or 5% on shares listed on the Egyptian Exchange (EGX). Dividends between resident companies are outside the base, and simplified-regime businesses are exempt. The tax is normally withheld when the dividend is paid, and your accountant confirms how it is paid to the ETA. The dividend itself comes out of profits after tax, not out of the company's costs.
When you can claim
When you cannot claim
- Dividends to shareholders
- Owner drawings recorded as expenses
- The 10% dividend tax itself, which is not a cost of the company
- Money taken by an owner without a decision, which is owed back to the company
- Interim payments to shareholders recorded as salary without payroll
- Dividends paid to a shareholder's family members who hold no shares
- Profit kept in the company, which is not a cost either
Good to know
Pro tip: Record dividends against retained earnings, not as an expense. Record the shareholders' decision to pay a dividend with the date and amount, and send it to Finn. It books the dividend, the tax withheld and what each shareholder receives. Keep the dividend decision, the payment record and the tax payment together.
Important: Profits of the permanent establishment of a non-resident company that are not distributed within 60 days after the financial year can be treated as distributed under that article. Ask your accountant. Salary paid to an owner who works in the business is different from a dividend. Salary goes through payroll with salary tax; a dividend is a share of profit after tax. Before paying a dividend, check with your accountant that the company has distributable profit and that the shareholders have approved the amount.
Related expenses
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