In-Kind Benefits and Taxation Under Egypt’s Law No. 91 of 2005
This article addresses the tax treatment of in-kind benefits granted to employees under the provisions of the Egyptian Income Tax Law No. 91 of 2005 and its executive regulations. It aims to clarify the legal classification of in-kind benefits, their deductibility for employers, exemptions granted to employees from salary tax, rules for valuing taxable benefits, as well as obligations related to withholding, collection, and tax compliance.
Legal Classification of In-Kind Benefits
According to Article 9 of Income Tax Law No. 91 of 2005, salaries and equivalent payments include all amounts and benefits received by an employee due to the employment relationship, regardless of their form, name, or payment schedule, whether provided in cash or in kind. Accordingly, in-kind benefits are considered part of taxable salary income unless there is an explicit legal provision exempting them.
Tax Treatment of In-Kind Benefits from the Employer’s Perspective
From the employer’s standpoint, in-kind benefits granted to employees are considered deductible expenses, provided they are incurred in the course of carrying out commercial or industrial activity. Article 17 of the law allows for the deduction of wages, salaries, and related benefits when directly attributable to business activity, while Article 22 permits the deduction of general and administrative expenses, including employee benefits, when necessary to generate taxable income. Therefore, in-kind benefits provided during the 2025 fiscal year remain deductible from corporate taxable profits according to general deduction rules.
Salary Tax Exemptions for Employees
Although in-kind benefits are generally subject to salary tax, Article 13 of the law provides several exemptions for employees. These exemptions include mandatory social insurance contributions, contributions to employee insurance funds established under Law No. 54 of 1975, life insurance premiums, health insurance premiums, and pension insurance premiums paid on behalf of the employee, their spouse, or minor children. Exemptions for certain insurance premiums are subject to a maximum limit of 15% of net income or EGP 10,000, whichever is lower, and cannot be applied to other income categories.
Exempt Collective In-Kind Benefits
The law also defines a separate category of collective in-kind benefits that are exempt from salary tax, excluded from taxable income with no upper limit. These benefits include meals provided to employees, collective transportation or equivalent costs, healthcare services, tools and clothing necessary for work, and housing provided by the employer for work purposes. Healthcare benefits, in particular, remain fully exempt from salary tax for employees during the 2025 fiscal year, with no percentage or monetary cap.
Valuation of Taxable In-Kind Benefits
- Company cars used for personal purposes by employees:
The benefit is valued at 20% of expenses related to fuel, insurance, and routine maintenance for these vehicles, whether owned or leased by the company.
- Mobile phones:
The benefit is valued at 20% of the annual phone-related expenses.
- Loans and advances provided by the employer:
If an employer provides a loan exceeding the total amounts received by the employee in the six months prior to the loan, either interest-free or with an interest rate below 7%, the benefit is calculated at 7% or the difference between the loan’s interest rate and 7% if the loan rate is lower than 7%. Loans include any form of advance payments recorded in the employer’s books and charged to the employee
- Life insurance for the employee, their family, or property:
The benefit is valued based on the premiums paid by the employer during the year.
- Company shares granted at a price below fair value:
The benefit is calculated as the difference between the fair value of the share at the date of acquisition and the price charged to the employee. If there are restrictions on transferring the shares, the benefit only materializes once these restrictions are lifted.
In all cases, the employer is responsible for withholding and remitting tax under Article 14 of the law and including all benefits in annual settlement statements. The employee is also responsible for withholding and remitting tax if required under Article 16. Therefore, healthcare benefits are considered fully exempt from salary tax for the employee under Article 13 of the law, without any percentage limit.
Withholding, Collection, and Compliance Obligations
Employers must comply with legal provisions for withholding and remitting salary tax under Article 14, disclose all taxable and exempt in-kind benefits in annual salary tax settlements, and follow withholding rules in Article 16 when applicable. Accurate classification and valuation of in-kind benefits are essential to ensure tax compliance and minimize risks during audits.
Conclusion
For the 2025 fiscal year, the Egyptian Income Tax Law continues to treat in-kind benefits as part of salary income in principle, while explicitly exempting certain personal and collective benefits. Collective in-kind benefits, particularly healthcare services, remain fully exempt from salary tax for employees, while in-kind benefits provided in the course of business are fully deductible for employers. Proper identification, valuation, and disclosure of these benefits remain critical to ensure full compliance with salary tax obligations.
Frequently Asked Questions
How are in-kind benefits defined under Egypt’s Tax Law 91 of 2005?
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According to Article 9 of Income Tax Law No. 91 of 2005, salaries and equivalent payments include all amounts and
benefits received by an employee due to the employment relationship, regardless of their form, name, or payment
schedule, whether provided in cash or in kind. Accordingly, in-kind benefits are considered part of taxable salary
income unless there is an explicit legal provision exempting them.
Are in-kind employee benefits taxable or exempt in Egypt?
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In principle, in-kind benefits are taxable as part of salary income. However, Article 13 of the law grants several
exemptions to employees, including mandatory social insurance contributions, contributions to employee insurance
funds under Law No. 54 of 1975, and certain life, health, and pension insurance premiums paid for the employee,
spouse, or minor children. Exemptions for some insurance premiums are capped at 15% of net income or EGP 10,000,
whichever is lower, and cannot be applied to other income categories.
Are in-kind benefits deductible for employers in Egypt in 2025?
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Yes. From the employer’s perspective, in-kind benefits granted to employees are considered deductible expenses if
they are incurred in the course of commercial or industrial activity. Article 17 allows the deduction of wages,
salaries, and related benefits when directly attributable to the activity, while Article 22 permits deduction of
general and administrative expenses, including employee benefits, when necessary to generate taxable income.
Therefore, in-kind benefits provided during the 2025 fiscal year remain deductible from corporate taxable profits
according to general deduction rules.
Which collective in-kind benefits are fully exempt from salary tax?
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The law defines a category of collective in-kind benefits that are excluded from taxable salary with no upper
limit. These include meals provided to employees, collective transportation or equivalent transportation costs,
healthcare services, tools and clothing necessary for work, and housing provided by the employer for work
purposes. Healthcare benefits, in particular, remain fully exempt from salary tax for employees during the 2025
fiscal year, with no percentage or monetary cap.
How are company cars and mobile phones taxed as in-kind benefits?
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For company cars used for personal purposes by employees, the in-kind benefit is valued at 20% of expenses related
to fuel, insurance, and routine maintenance for these vehicles, whether owned or leased by the company. For mobile
phones, the in-kind benefit is valued at 20% of the annual phone-related expenses. These calculated amounts are
treated as taxable in-kind salary income unless another exemption applies.
How are employee loans and insurance treated for tax purposes?
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If an employer provides a loan exceeding the total amounts received by the employee in the six months prior to the
loan, either interest-free or with an interest rate below 7%, the in-kind benefit is calculated at 7% of the loan
amount, or the difference between the loan’s interest rate and 7% if the rate is lower. Loans include any advance
payments recorded in the employer’s books and charged to the employee. For life, health, pension, or property
insurance, the in-kind benefit is valued based on the premiums paid by the employer during the year. Certain
premiums are exempt for employees up to 15% of net income or EGP 10,000, whichever is lower. In all cases, the
employer is responsible for withholding and remitting tax under Article 14 and including all benefits in annual
settlement statements, while the employee may also be responsible for withholding and remitting tax when required
under Article 16.
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