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TaxRobin
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Experience:  International tax
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For the attention of Tax Robin I have just returned from

Resolved Question:

For the attention of Tax Robin
I have just returned from working in Cairo, Egypt as a self-employed contractor
I am aware there is a reciprocal agreement between UK & Egypt for paying income tax at source, however:
1. I went to work on 5th July on a VISITORS visa and it is my understanding that no-one is allowed to work in Egypt under these conditions.
2. I returned to UK on 13th August and, despite numerous attempts to gain the correct Work Permit, nothing has been done to accommodate this.
3. The company tax 'expert' in Dubai has stated that "Local entity will issue work permits to hire contractors as local employees and claim their costs in the local books. Individuals are liable for income tax once the work permits are issued."
4. I have recently been paid for my work in July 2016, whereby tax has been deducted at source at a rate of 25%. A proportion of the total represents expenses which has also been taxed.
Question 1: Is the company allowed to deduct tax retrospectively and, in the absence of any work permit or, am I responsible for declaring my gross earnings to HMRC?
Question 2: Are expenses tax deductable or, should these be declared in my UK tax return?
Note: I am not returning to Cairo (resigned due to these and other reasons) and will not have been issued with a valid work permit for the duration of my contract. Neither have I been issued with a Tax Certificate, possibly because the company has not yet set up a system to pay the Egyptian Tax Authorities.
More information available on request
Submitted: 1 year ago.
Category: Tax
Expert:  TaxRobin replied 1 year ago.

Hello

Employers must continue to calculate and deduct PAYE tax from all payments made to employees who work abroad.

Expenses could be claimed when you declare. If you were not an employee then you need to file a Self Assessment and declare the income. As the company withheld the tax then it appears you are an employee.

Your VISA would not change the tax requirement.

Customer: replied 1 year ago.
The offer I received was:Instructor assigned to the Egypt Airports Project in Egypt (“the Project”) as a self-employed Contractor.
Customer: replied 1 year ago.
There are other references in various documents to 'self-employed contractor'
Expert:  TaxRobin replied 1 year ago.

I see. The tax withheld was for UK or Egypt?

Expert:  TaxRobin replied 1 year ago.

When you declare on your Self Assessment the amount will count as advance payments towards your tax and National Insurance bill.

Customer: replied 1 year ago.
Egypt (the company - Olive Group) have regional offices in Dubai from where payment is made and do not, as yet, have any facilities set up in Egypt for payment of tax to Egyptian authorities and, appear to be withholding tax retrospectively and, until work permits are issued.
Expert:  TaxRobin replied 1 year ago.

Let check on specific need for the double tax then. One sec

Expert:  TaxRobin replied 1 year ago.

Under treaty

Article 14 Independent Personal Services

(1) Income derived by an individual who is a resident of one of the Contracting States from the performance of personal services in an independent capacity may be taxed in that State. Such income may also be taxed in the other Contracting State if:

(a) the individual is present in that other State for a periods exceeding in the aggregate 120 days in the tax year concerned, but only so much thereof as is attributable to services performed in that state; or

(b) the individual has a fixed base regularly available to him in that other State for the purpose of performing his activities, but only so much thereof as is attributable to services performed in that State.

They are anticipating your being in the country. From what I have found most will withhold even prior to the proper permits.

Article 22 is used for Elimination of Double Taxation.

(1) Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom

You can claim the credit on UK filing.

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