Introduction
Withholding Tax (WHT) refunds in Egypt can offer significant financial relief for foreign companies and multinationals receiving cross-border payments.
But despite eligibility under Double Tax Treaties (DTTs), many refund applications are rejected by the Egyptian Tax Authority (ETA) due to documentation gaps, misinterpretation of treaty rules, or inconsistencies in the refund file.
Understanding why refund claims get rejected and how to proactively avoid these issues is essential for a smooth approval process.
1. Missing or Invalid Tax Residency Certificate (TRC)
Why ETA Rejects It
The TRC is the most critical document supporting the right to benefit from a tax treaty. ETA frequently rejects claims when:
The TRC is expired
The TRC covers a different year than the payment period
The TRC is not stamped or not original
The legal name doesn’t match invoices/contracts
How to Avoid It
Obtain TRC early each year
Make sure names match exactly
Use original stamped copies
Align TRC validity with payment dates
2. Failure to Prove Beneficial Ownership
Why ETA Rejects It
Even if a treaty applies, ETA requires proof that the foreign entity is the actual Beneficial Owner, not a conduit or intermediary.
Rejection occurs when the file does not show:
Substance in the foreign country
Real operations (employees/offices)
Control and decision-making
Economic ownership of the income
How to Avoid It
Submit:
Beneficial Ownership declaration
Company profile & org chart
Evidence of employees, offices, website
Financial statements
3. Incorrect Classification of the Payment
Why ETA Rejects It
Many claims fail because the taxpayer chooses the wrong treaty article. For example:
Treating technical services as pure services
Misclassifying cloud services as royalties
Mislabeling software payments
Using Article 7 incorrectly
How to Avoid It
Conduct a clear treaty analysis:
Identify correct article (Service? Royalty? Interest?)
Match service description with treaty definitions
Provide documentation proving classification
4. Insufficient Proof of Service Delivery
Why ETA Rejects It
ETA often rejects claims when there is not enough evidence that:
The service was actually performed
The service provided value to the Egyptian company
Deliverables match the invoice
How to Avoid It
Provide:
Emails
Timesheets
Reports & deliverables
Meeting minutes
Screenshots or system logs
5. No Proof of Payment to the Foreign Provider
Why ETA Rejects It
Even if an invoice exists, ETA must confirm:
The foreign entity received the payment
Amounts match the invoice
Date and currency are correct
How to Avoid It
Provide:
Bank SWIFT
MT103 confirmation
Bank statement extract (sensitive details hidden)
Payment matching sheet
6. Contract and Invoice Mismatches
Why ETA Rejects It
Any of the following lead to immediate rejection:
Contract amount differs from invoice
Contract describes different services
Contract is missing dates or signatures
Contract does not explain cross-border nature
How to Avoid It
Ensure:
Contract aligns fully with invoices
Services performed match the contract scope
Dates and amounts are consistent
7. Missing or Incorrect Form 41 (WHT Certificate)
Why ETA Rejects It
ETA compares the refund amount to Form 41.
Common issues include:
Missing Form 41
Wrong beneficiary name
Wrong WHT rate
Figures not matching actual payments
How to Avoid It
Cross-check numbers before submission
Make sure the payer issued Form 41 correctly
Ensure 41 aligns with bank transfers
8. Claiming Treaty Benefits Without Meeting Conditions
Why ETA Rejects It
Some taxpayers rely on treaty benefits without proving eligibility, especially regarding:
Permanent Establishment (PE) rules
Article-specific requirements
Source rules
How to Avoid It
Submit a clear treaty-benefit memo showing:
Why the foreign entity has no PE in Egypt
Why the treaty article applies
How conditions are met
9. Weak or Missing Explanation Letter
Why ETA Rejects It
A poor explanation makes the case unclear.
How to Avoid It
Your cover letter must include:
Nature of service
Basis for refund
Legal references
Document index
Refund calculation
10. Submitting Incomplete Documentation Package
Why ETA Rejects It
ETA rejects any case lacking a clear and complete file.
How to Avoid It
Prepare a structured file including:
TRC
BO declaration
Contract
Invoices
Payments
Form 41
Deliverables
Treaty memo
Checklist
Conclusion
WHT refund rejections in Egypt usually stem from documentation gaps, inconsistencies, or incorrect treaty interpretation.
But with strong evidence, clear classification, a complete file, and proactive compliance, companies dramatically increase their chances of approval.
Preparing a clean, organized, and audit-ready submission is the key to avoiding delays and securing the refund successfully.
