Instruction No 4 / 2005 Regarding Termination of the Litigation Disputes held at the Court

The new instruction organised the termination of the litigation disputes existing between companies and the tax administration according to the following brackets:

• (10%) of the amount of the tax and the other amounts due on the taxable base subject of litigation, if it does not exceed a total of one hundred thousand pounds
• (25%) of the amount of the tax and other amounts due on the taxable base subject of the litigation, with regard to the portion exceeding one hundred thousand pounds up to five hundred thousand pounds of that base, after settling the percentage prescribed in item (1) with regard to the range up to and not exceeding one hundred thousand pounds of that taxable base
• (40%) of the amount of the tax and other amounts due on the taxable base subject of the litigation, with regard to the portion exceeding five hundred thousand pound of that base, after settling the two percentages prescribed in items (1 & 2) with regard to a range up to and not exceeding five hundred pound of that taxable base

The tax payer’s settlement of the percentages prescribed according to the previous items should result in clearing tax interest subject of litigation. Here are some examples to demonstrate the instruction in order to calculate the taxability and arrangement of payments. For example, the taxable amount of company X is L.E 2 000 000 for the year 2000 , in which the client X sues a case in the court for some items equal to L.E 800 000. Therefore, the taxable amount litigation in the court will be L.E 800 000 and the tax due according to instruction no. 4/ 2005 will be calculated as follows:

• Therefore the taxable value on the remaining tax base is L.E 1 200 000 and the amount L.E 480 000, ( i.e. 1 200 000 x 40 %) represents the total tax which should be paid according to the rules of settlement disputes in the Termination of the Litigation Disputes held at the Court. This is explained as follows: