A Closer Look at Egypt’s Income Tax Adjustments for 2024

In an attempt to alleviate the burden of high inflation on low-income individuals, the Budget Committee of the Egyptian House of Representatives has approved important amendments to the Income Tax Law. These amendments will raise the tax exemption threshold by 33%, from 45,000 to 60,000 Egyptian pounds.

President Abdel Fattah El-Sisi announced this step for the first time in February 2024 as part of a comprehensive package of measures aimed at mitigating the impact of inflation.

Currently, Egypt offers two income tax exemptions. Firstly, everyone, regardless of their income, is exempt from paying any tax on the first 20,000 Egyptian pounds of their income. Additionally, individuals with an annual income below 600,000 Egyptian pounds have a tax range of 0%, in addition to the initial exemption currently set at 40,000 Egyptian pounds.

As a result, employees in the lowest income bracket are not subject to wage taxes on the first 60,000 Egyptian pounds of their income.

With the newly approved amendments, a progressive tax will be imposed on any income exceeding 55,000 Egyptian pounds (including 20,000 Egyptian pounds as a personal allowance) at the following rates:

• Income ranging from 40,001 to 55,000 Egyptian pounds will be taxed at 10%.
• Income ranging from 55,001 to 70,000 Egyptian pounds will be taxed at 15%.
• Income ranging from 70,001 to 200,000 Egyptian pounds will be taxed at 20%.
• Income ranging from 200,001 to 400,000 Egyptian pounds will be taxed at 22.5%.
• Income ranging from 400,001 to 1.2 million pounds will be taxed at 25%.
• Any income exceeding 1.2 million pounds annually will be taxed at 27.5%.

It is worth mentioning that this is the first time this year that Egypt has raised this exemption, reflecting the government’s commitment to providing relief to low-income earners. The government had earlier announced an increase in the exemption threshold to 40,000 pounds, which came into effect on March 1, 2024.

Conclusion

The amendments to the Income Tax Law, approved by the Budget Committee of the Egyptian House of Representatives, represent a significant step towards addressing high inflation’s impact on low-income individuals. President Abdel Fattah El-Sisi introduced these amendments as part of a comprehensive package of measures aimed at mitigating inflation’s effects, highlighting the government’s commitment to assisting those in need. One key amendment involves increasing the tax exemption threshold by 33%, from 45,000 to 60,000 Egyptian pounds. This change ensures that employees in the lowest income bracket are not subject to wage taxes on the first 60,000 Egyptian pounds of their income. Additionally, the introduction of a progressive tax structure for incomes exceeding 55,000 Egyptian pounds ensures that individuals with higher incomes contribute proportionally more to tax revenues.

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