Crypto Taxation in Egypt: A Complete Guide

The government of Egypt keeps all digital assets illegal, which prevents most people from using digital currency. Under Central Bank of Egypt and Banking System Law No. 194 of 2020, all cryptocurrency operations are forbidden, including buying, selling, mining and advertising. Many Egyptians still participate in crypto platforms abroad, which puts them at risk of law enforcement penalties. Understand Egypt’s rules about crypto taxation to prevent financial problems. The Egyptian Tax Authority, as a regulatory body, does not collect taxes from cryptocurrency since it is currently not recognized legally by the public institution.

Tax Authorities & Regulations 

The Egyptian Tax Authority is the sole authority that oversees Tax affairs in Egypt. Additionally, given that the criminalization of cryptocurrency is under Law No. 194 of 2020, these do not fall under the purview of the ETA’s taxation. Nevertheless, the issuance, trading and promotion of any virtual currencies are outlawed unless first approved by the Central Bank of Egypt (CBE).

Under Egyptian law, the government treats cryptocurrencies as neither legal currency nor as personal property. In 2018, the Islamic state authority ruled that using cryptocurrencies goes against Islamic law, making Egypt continue enforcing its strict limits on digital assets. The CBE continues to warn the public about crypto use because it sees risks for national monetary power, stable economy and risks of money-related crimes.

Types of Crypto Taxes in Egypt

Due to the illegal status of cryptocurrencies in Egypt, no formal taxation applies to digital assets. However, if legalized in the future, the following tax categories may be considered:

• Capital Gains Tax (CGT): Currently not applicable.
• Income Tax: Not applicable, as crypto earnings are not recognized.
• Value-Added Tax (VAT): Not levied on crypto transactions.
• Other Taxes: No wealth tax, inheritance tax, or similar crypto-related taxes are in place.

Tax Rates & Brackets

• Capital Gains Tax Rates: Not applicable as crypto is illegal.
• Income Tax Slabs: Not applicable to crypto-related earnings.
• Exemptions or Reductions: No tax benefits or exemptions for cryptocurrency holders or traders.

Crypto Transactions & Tax Treatment

• Buying and Selling Crypto: Illegal, no taxation applies.
• Crypto Mining and Staking: Illegal and carries no tax implication.
• Crypto Received as Salary or Payment: Not recognized; thus, untaxed but still illegal.
• Crypto-to-Crypto Trades: Illegal with no tax recognition.
• DeFi, Lending, Yield Farming: All DeFi-related activities are banned.
  
• NFT Transactions: NFTs fall under the broader crypto ban and are also considered illegal.

Crypto Tax Reporting & Compliance

Crypto taxes in Egypt do not have any legal filings as digital assets are unaccounted under any tax regulation. Crypto reporting guidance and tax forms are not offered by the ETA. However, crypto activity will not be a tax issue, but a legal wrongdoing that can subject a person to criminal prosecution.

• No forms, no reporting thresholds.
• No record-keeping obligations are required by the ETA for crypto.
• However, financial institutions monitor transactions and may report suspicious crypto-related activity to the authorities.

Tax Deductions & Exemptions 

Tax deductions and exemptions are non-existent in terms of crypto activities since the practice is outlawed in Egypt. The losses suffered from crypto trading or investments cannot be offset against gains, and if a taxpayer derives income from crypto mining, staking, or transactions, such income cannot be anticipated as a business expense for tax purposes. Due to cryptocurrencies not being legally recognized as income or assets, traders cannot claim depreciation, write-offs or any relief pertaining to their digital asset transactions. Crypto businesses risk prosecution rather than paying a tax penalty. When one is, or has the potential to, possess or interact with digital assets in Egypt, the legal risks outweigh any financial potential to the extent that seeking professional legal counselling is of utmost importance.

Enforcement & Penalties for Non-Compliance 

With a zero tolerance policy, the Egyptian government implements its ban on cryptocurrency. In accordance with Know Your Customer (KYC), anti-money laundering (AML) standards, and other tools, financial institutions and the Central Bank of Egypt (CBE) already enjoy monitoring financial activity and flag possible crypto transactions.

Fines, imprisonment, and confiscation of the offender’s assets may be imposed. Accessing international exchanges or even riding on decentralized platforms can catch the attention of the authorities for connecting with Egyptian financial institutions or IP addresses. Furthermore, a Dar al-Ifta 2018 fatwa, which classifies Bitcoin and other virtual currencies as haram, provides further religious grounds for enforcement, especially in Egypt, where Islam is the dominant religion.

Therefore, crypto people can be prosecuted for financial crime instead of tax evasion or Law No. 194 of 2020, which is a criminal matter rather than fiscal. The real fact here is that crypto is not under the purview of ETA so far, so crypto participants are not safe, their jurisdiction will be shifted to criminal enforcement bodies like the financial intelligence unit, central banking regulators. However, the best route is to remain in total avoidance of any crypto activities while living in Egypt.

Future of Crypto Taxation in Egypt 

Until April 2025, it is confirmed that there will be no legalization or tax on cryptocurrencies in Egypt. Nevertheless, the government is currently researching the establishment of a Central Bank Digital Currency (CBDC) by 2030. In evidence, this could lead to a change in the digital finance game, but not necessarily to the benefits of decentralized assets such as Bitcoin. Once digital assets are regulated in the future, Egypt may implement a taxation framework for compliant, centralized digital assets.

Conclusion 

Egypt still continues to regard cryptocurrencies as illegal, with no taxes on cryptocurrencies and making any cryptocurrency activity may put a holder at considerable legal risk. As of now, the Egyptian Tax Authority has no crypto-specific tax laws, meaning all crypto transactions are outside the tax regime since they are currently prohibited. All citizens and permanent residents are advised to avoid crypto involvement, as it would be in compliance with national laws. But as the digital economy in Egypt progresses, future regulation, particularly with respect to Egypt’s potential CBDC, may open new digital finance pathways. However, anyone in Egypt on the path of digital assets needs legal and financial guidance until then.

Frequently Asked Questions (FAQs)

1. Is cryptocurrency legal in Egypt?

Under the Central Bank of Egypt and Banking System Law No. 194 of 2020, cryptocurrencies are banned.

2. Is there any cryptocurrency tax in Egypt?

Cryptocurrencies are illegal; hence, they do not go under any form of taxation.

3. What are the fines associated with trading cryptocurrencies in Egypt?

Participating in crypto transactions can be legal grounds for prosecution culminating in fines, prison sentences and confiscation of assets.

4. Can I voluntarily report my crypto income to the ETA?

Currently, crypto income is not recognized by the ETA and thus voluntary reporting does not apply.

5. Will cryptocurrencies be legalized in Egypt anytime soon?

Egypt is looking into a CBDC even though it banned cryptocurrencies; however, if the country did choose to open up to digital assets, it wouldn’t necessarily be to the unregulated, decentralized variety.