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Tax accountability of non- commercial professions revenues (TNCPR)

Tax accountability of non- commercial professions revenues (TNCPR). The tax is levied on the net profit which is made by self employed persons. Those persons, referred to as professionals, include for instance, doctors, dentists, engineers, accountants, and lawyers.

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Tax accountability of non- commercial professions revenues (TNCPR)

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  1. Tax accountability of non- commercial professions revenues(TNCPR)

  2. The tax is levied on the net profit which is made by self employed persons. Those persons, referred to as professionals, include for instance, doctors, dentists, engineers, accountants, and lawyers.

  3. Measurement of taxable revenues: • taxable revenues include: • Revenues derived from carrying on profession: for example: revenues of a doctor are: fees of surgical operations, medical examinations, and medical consultations. • Capital gains from disposing of any professional assets. • Capital gains = selling price – Book value. • Incidental revenues related to non-commercial activity such as compensations, and sums received for television or broadcast speeches.

  4. Measurement of allowable deductions: • The following items are considered the amount of allowable deductions: • First group: expenses from exercising the profession: • Any expenses related to exercising the activity (salaries, stationary , ….) in addition to depreciation expenses. • There are three conditions: • It should be necessary to exercising the profession. • it should be documented otherwise there are two tax treatments which are: • First treatment: taxpayer has regular accounting books, the undocumented expenses are deducted to extent of 7% of the total actual general and administrative expenses. • Second treatment: taxpayer has no regular accounting books, all allowable deductions are estimated as 10% from total taxable revenue.

  5. Second group: non professional deductions (not related to practicing the profession): • 1- Contributions: include: • Contribution to government units: without limit. • Contribution to non government units: maximum 10% of taxable net profit before contribution. • 2- Private pension fund and life and medical insurance premiums (not exceed L.E 3000 per year).

  6. The general model of measurement the tax net profit

  7. Example(1): Doctor Adham started a new business (Dr. Adham laboratory). The following particulars of revenues and expenses for the year 2012. First: revenues received during the year were: • L.E. 24,000 fees. • L.E. 12,000 consultation fees for Egyptian companies. • L.E. 4,000 capital gain from selling an old air- condition. Second: the following amounts were paid during the year: • L.E. 5,000 salaries paid to assistants. • L.E. 1,000 telephone and telegraph charges. • L.E. 10,000 medical supplies used. • L.E.2,000 deprecation expense. • L.E. 2,000 contribution to government units. • L.E. 1,000 contribution to non government units. • L.E. 1,500 subscription in doctors syndicate pension-fund. • L.E. 2,500 insurance premium on the taxpayer's life. Required: Determine the taxable profit for non- commercial professions.

  8. First: The taxable revenues: Example (2): The taxpayer has no regular accounts and records • Assume in the previous example that Adham has no regular books (accounting records).

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