Source:
- Income Tax Law No. 91 of 2005, Article 30 — arm's length principle and transfer pricing framework, amended in May 2018
Summary of local requirements
Strict Format: Not specified
Language: The Master and Local Files can be prepared in English; however, the Egyptian Tax Authority may ask for an Arabic translation.
To download the legislation in the original language, go to:
Local File
| Step 1 | Identifying the controlled transactions and understanding the nature of such transactions |
| a) | Documents related to the nature of the industry/ market in which the taxpayer operates, including details on: |
| (i) | The taxpayer's business including its business lines, and activities |
| (ii) | The nature of the taxpayer's industry dynamics and the analysis of the economic factors influencing both the taxpayer's business and the industry |
| (iii) | The market in which the taxpayer operates in terms of its location, size, competition, etc. |
| b) | Documents related to the taxpayer’s business policies and strategies, including details on: |
| (i) | The taxpayer's business model |
| (ii) | The taxpayer's transfer pricing policy |
| (iii) | The organisational and management structure of the taxpayer |
| (iv) | The business strategies adopted by the taxpayer, especially those strategies which are likely to influence the pricing of controlled transactions, such as pricing strategies, market penetration/ expansion strategies, or any business restructurings etc. |
| (v) | In this regard, it should be noted that details on the studies conducted prior to the strategy implementation should be provided. Such details should emphasise the aim of the strategy, its duration, its related costs and the profits expected to be earned in return of such costs, etc. |
| c) | Documents related to the controlled transactions under review: |
| (i) | Documents identifying the object (the property and/ or services) of the transaction under review |
| (ii) | Business relationships between the transaction parties (selling/purchasing goods, providing services, using intangibles, etc.) |
| (iii) | Documents describing the controlled transactions in terms of its range, type, timing and frequency, the parties to the transaction, the amount of controlled payments and receipts for each transaction broken down by tax jurisdiction etc. |
| (iv) | Contracts/ agreements showing the contractual terms of the transaction |
| (v) | A preliminary functional analysis of the functions performed, assets used and risks assumed by the taxpayer and by the associated enterprise involved in the controlled transaction under review |
| d) | Documents related to the comparables including: |
| (i) | A list of any known comparable enterprises having transactions similar to the controlled transactions |
| (ii) | Documents identifying the screening criteria for selecting the comparables |
| (iii) | A preliminary functional analysis of the functions performed, assets used and risks assumed by the selected comparable enterprise in the selected comparable uncontrolled transaction |
| Step 2 | Selecting the most appropriate transfer pricing method(s) |
| a) | Documents identifying the pricing method(s) used |
| (i) | Describing the processes followed to select such a method, and explaining the reasons for selecting that method in pricing the controlled transaction under review |
| (ii) | In the case of using a profit based transfer pricing method, taxpayers are advised to submit documents outlining the reasons for considering the three traditional transaction methods as less appropriate in the circumstances of the case and the reason why the selected other method was regarded as providing a better solution |
| b) | Documents presenting the analysis conducted to evaluate the reliability of data used |
| Step 3 | Applying the selected pricing method |
| a) |
Documents that are generally produced regardless of the pricing method used This category may outline the following details: |
| (i) | The detailed comparability study conducted by the taxpayer. Such a study includes an analysis outlining the comparisons drawn between the controlled transaction under review and the selected comparable uncontrolled transaction(s) with regard to different factors including the characteristics of the property or service transferred, the functions performed and the economic significance of each, the assets used, the risks assumed, the contractual terms, market circumstances, business strategies adopted, etc. |
| (ii) | In this respect, the OECD Transfer Pricing Guidelines state that: “The geographic market is another economic circumstance that can affect comparability. The identification of the relevant market is a factual question. For a number of industries, large regional markets encompassing more than one country may prove to be reasonably homogeneous, while for others, differences among domestic markets (or even within domestic markets) are very significant” |
| (iii) | Thus, it may be the case that uncontrolled transactions from markets other than that of the taxpayer constitute reliable comparables, or may be used as the best available comparables in the absence of local market comparables |
| (iv) | It is therefore recommended that the taxpayer first considers the search for comparables in the local market. When this data is not available, the taxpayer is advised to expand the geographic location in which the search is being performed gradually to initially consider comparables operating within the same geographic region. When this data is not available, the taxpayer may then search for comparables globally, or within those regional markets in which the taxpayer industry’s operating conditions are deemed to be comparable |
| (v) | Hence, if the tested party for which comparables are being searched is an Egyptian entity, it is recommended that Egyptian comparables are first searched for. When data on Egyptian comparables is not available, regional (i.e. Middle Eastern and African) comparables may be searched for instead. When Middle Eastern and African comparables cannot be located, global comparables may then be searched for |
| (vi) | Yet, in the search for the most reliable available comparables, potential differences in geographic markets and locations need to be weighed against the other economically relevant characteristics. In any case, the details of the strategy adopted to arrive at the comparable transaction(s)/companies should be clearly disclosed in the local file |
| (vii) | The material differences between the controlled and the selected comparable uncontrolled transactions, how such differences were quantified and how the necessary adjustments were made accordingly, in order to account for such differences |
| (viii) | Documents showing all the financial calculations made in applying the selected method(s) and determining the arm's length value |
| (ix) | A copy of existing unilateral, bilateral/multilateral APAs, and other tax rulings to which the taxpayer is not a party and which are relevant to the taxpayer’s controlled transactions covered in the local file |
| b) | Documents related to the pricing method applied |
| (i) | Such documents differ from one case to another based on the pricing method applied in each case. This is due to the fact that different methods require different types of data and analyses, which is consequently reflected in the documentation developed throughout this step. In any case, a description of any important assumptions made in applying the transfer pricing method should be provided |
| (ii) | The following represents a sample of these documents: |
| - |
CUP method Documents that accurately describe the comparisons drawn between the characteristics of property or services transferred in the controlled and the comparable uncontrolled transactions, along with any differences. Such comparisons may extend to describe how such differences affect the specifications, effectiveness and quality of such property, and what impact these differences have on the price |
| - |
RPM The functional analysis of both the taxpayer and the comparable independent enterprises with respect to the controlled and the comparable uncontrolled transactions, along with documents emphasizing their functional comparability; Documents showing the comparisons drawn between gross profit margins earned in both transactions; and Statement presenting reconciliation of differences between the accounting practices followed by the taxpayer and those followed by the selected comparable independent enterprises |
| - |
CPM • The functional analysis of both the taxpayer and the comparable independent enterprises with respect to the controlled and the comparable uncontrolled transactions, along with documents emphasizing their functional comparability; • Documents outlining how the cost base for the controlled transaction under review was calculated, through highlighting the costs included in the cost base, the basis of allocating indirect costs included in the cost base, etc; • Documents showing the comparisons drawn between mark-ups of gross profits earned in both transactions; and • In the case of using marginal costing, documents providing the reasoning for using it and how effective it is in determining the arm's length gross profit mark-up in such a case |
| - |
PSM • Documents showing whether the level of applying this method is transactional basis or aggregate basis and providing the reason for that; and • Documents showing the functional comparability, the combined profit that was calculated, the contribution or residual analysis, reconciliation of accounting practices differences, the basis of projecting profits (if the combined profit used is projected) |
| - |
TNMM Documents showing the details of the benchmarking analysis undertaken, and the series of steps followed, including qualitative and quantitative analyses, to arrive at the final set of comparables; and Documents showing the profitability ratios used and the reasons for using these ratios in particular, how the resulted range of outcomes was evaluated and how the taxpayer selected the most reliable arm's length net profit margin, etc. |
| Step 4 |
Determining the arm's length amount and introducing a review process to reflect any future changes Documents that are expected to be prepared throughout this step may outline the following details: |
| a) | The established arm's length price |
| b) | The actions undertaken to monitor the changes in the circumstances of both the taxpayer and the comparable enterprises, as well as the changes in the validity of data used in the previous steps |
| c) | The evaluation of the impact of such changes (if any) on the validity of the arm's length amount |
| d) | The adjustments made to account for such an impact, in order to obtain a reliable arm's length amount to be used in the near future |
| Optional | General documents recommended to be prepared |
| a) | The amount of sales and operating results from the last few years (three years is ideal) preceding the transaction under review |
| b) | Annual reports and financial statements of the taxpayer. The taxpayer should also provide financial statements on a transactional basis, i.e., segmented financial statements |
| c) | Profitability analysis with respect to the controlled transactions. The profitability analysis should entail analyzing the profitability of the taxpayer with respect to each controlled transaction on a stand-alone basis against the arm’s length range of the comparables identified. It should also show how the financial data used in applying the transfer pricing method ties with the annual audited financial statements |
Recommendations for Local File:
Regarding content requirements:
-
Industry and Market Analysis:
Egypt requires a description of the nature of the taxpayer's industry dynamics and the economic factors influencing both the taxpayer's business and the industry, as well as the market in which the taxpayer operates, in terms of its location, size, and competition.
We recommend documenting the industry overview, market dynamics, and economic factors in the Business Description subsection of the Entity Description tab, and capturing competitive landscape details in the Main Customers & Competitors tab of the Legal Entities section.
-
Business Strategy Implementation Studies:
Egypt requires that details of any studies conducted prior to a strategy implementation be provided, emphasising the aim of the strategy, its duration, related costs, and expected profits.
We recommend documenting these pre-implementation studies and their supporting details in the Business Strategy Description subsection of the Entity Description tab. Where the supporting analysis is extensive, save it as a supplemental document in the Resources section.
-
Hierarchy of Comparables Search — Egyptian-First Approach:
Egypt requires that the search for comparables prioritise Egyptian comparables first, then regional (Middle Eastern and African) comparables, and only expand to global comparables where regional data is unavailable. The strategy adopted must be clearly disclosed.
We recommend documenting the geographic search hierarchy and the rationale for expanding beyond the local market in the benchmark study, including screenshots of the search conducted in the Egyptian market. Save these materials in the Benchmarks & Comparables section.
-
Arm's Length Price Monitoring and Adjustment Review:
Egypt requires documentation of the actions undertaken to monitor changes in the circumstances of both the taxpayer and the comparable enterprises, as well as any adjustments made to maintain a reliable arm's length amount for future use.
We recommend documenting the review process and any resulting adjustments in the Reason for concluding that transaction is at arm's length column in the Arm's Length Validations tab of the Economic Analysis section, and saving the supporting monitoring schedule in the Resources section.
-
Optional Documents:
Egypt recommends preparing sales and operating results from the three years preceding the transaction, annual financial statements, and a profitability analysis on a transactional basis, demonstrating how the financial data ties to the audited financial statements.
We recommend saving all optional supporting documents — including multi-year financial data, annual reports, and segmented financial statements — in the Resources section for attachment to the Local File.
Regarding format/structural requirements:
Egypt does not prescribe a strict standardised template for the Local File. The ETPG prescribes a four-step procedural structure: (1) Identifying the controlled transactions and understanding their nature, (2) Selecting the most appropriate transfer pricing method, (3) Applying the selected method, and (4) Determining the arm's length amount and introducing a review process.
We recommend preparing the Local File using TPDoc's standard Local File functionality. Note that as of December 2025, the documentation threshold has been raised to EGP 30 million of annual related-party transactions; entities below this threshold are exempt from preparing a Local File but must still complete Table 508 in their corporate tax return. The Local File must be submitted within two months of the corporate income tax return filing date. Use TPDoc's AI translation functionality to produce an Arabic translation if requested by the Egyptian Tax Authority.
Master File
| Step 1 | Identifying the controlled transactions and understanding the nature of such transactions |
| a) | Documents related to the Group of Associated Enterprises (hereinafter GAE) as a whole including details on: |
| (i) | The organizational structure of the GAE as a whole (e.g. ownership linkages within the GAE, changes in the main shareholdings, the location of each member, etc.) |
| (ii) | The outline of the business activities undertaken by the GAE, including a description of the supply chain, key service agreements, key geographic markets, brief functional analysis on the principle contributions to value creation, details of the five largest products/services offerings and important business restructuring transactions |
| (iii) | The GAE controlled financial activities, including a description of how the group is financed and the relevant financing agreements, identification of GAE members with a central financing function and their location, details of the place of effective management along with a description of the relevant transfer pricing financing policies |
| (iv) | The GAE intangibles, including a description of the overall strategy for the development, ownership and exploitation of intangibles, list of important intangibles and their ownership, details of principal research and development facilities and management location, relevant important agreements and transfer pricing policies, and any important transfers of interests in intangibles among the members of the GAE |
| (v) | The GAE’s financial and tax positions, including the annual consolidated financial statements of the GAE, and a list and brief description of any existing APAs or other tax rulings relating to the allocation of income amongst the GAE members |
Recommendations for Master File:
Regarding content requirements:
Egypt's Master File content requirements are closely aligned with the OECD BEPS Action 13 Master File structure. TPDoc's standard Master File functionality covers all required sections. No additional documentation beyond what is standard in TPDoc is required from a content perspective.
Regarding format/structural requirements:
Egypt does not prescribe a strict standardised template for the Master File. The content requirements are defined under the Egyptian Transfer Pricing Guidelines (ETPG) and are closely aligned with the OECD BEPS Action 13 Master File structure.
We recommend preparing the Master File using TPDoc's standard Master File functionality. Note that the Master File must be made available to the Egyptian Tax Authority in alignment with the Ultimate Parent Entity's filing deadline in its home jurisdiction; where no such deadline applies, it must be submitted together with the Local File. Use TPDoc's AI translation functionality to produce an Arabic translation if requested by the Egyptian Tax Authority.