Personal Income Tax in Egypt: Exemptions, Rates, and Compliance
Navigating Egypt’s taxation system and personal income tax in Egypt, as well as social security regulations, is essential for individuals and businesses to meet the country’s tax requirements effectively. Here’s a comprehensive overview of the key components:
Taxation of Personal Income:
Exempted Income: Certain income sources, such as pensions, end-of-service bonuses, and specific allowances, may be exempt from income tax.
Tax Exemptions: The law legislator updated the personal exemption limit to be 20000 L.E.
Business Income: Self-employment income is taxed according to standard tax brackets.
| Tax rate | Net income that doesn’t exceed 600,000 EGP | Over 600,000 EGP Up to 700,000 EGP | Over 700,000 EGP Up to 800,000 EGP | Over 800,000 EGP Up to 900,000 EGP | Over 900,000 EGP Up to 1,200,000 EGP | Over 1,200,000 |
| 0% | 1 EGP up to 40,000 EGP | | | | | |
| 10% | Over 40,000 EGP up to 55,000 EGP | 1 EGP up to 55,000 EGP | | | | |
| 15% | Over 55,000 EGP up to 70,000 EGP | Over 55,000 EGP up to 70,000 EGP | 1 EGP up to 70,000 EGP | | | |
| 20% | Over 70,000 EGP up to 200,000 EGP | Over 70,000 EGP up to 200,000 EGP | Over 70,000 EGP up to 200,000 EGP | 1 EGP up to 200,000 EGP | | |
| 22.50% | Over 200,000 EGP up to 400,000 EGP | Over 200,000 EGP up to 400,000 EGP | Over 200,000 EGP up to 400,000 EGP | Over 200,000 EGP up to 400,000 EGP | 1 EGP up to 400,000 EGP | |
| 25% | Over 400,000 EGP | Over 400,000 EGP | Over 400,000 EGP | Over 400,000 EGP | Over 400,000 EGP | 1 EGP up to 1,200,000 EGP |
| 27.50% | | | | | | Over 1,200,000 |
Employment Income: Salaries and bonuses earned from employment are subject to taxation for both residents and non-residents, irrespective of where the salary is received. Tax rates range from 10% to 27.5% based on income levels.
Equity Compensation: Taxation may apply when employees realize equity compensation, calculated based on the discrepancy between the fair market value of shares and the purchase price.
Capital Gains: Profits from share sales, whether listed or unlisted, are subject to capital gains tax, influenced by residency status and share type.
Returns Received from Funds: Gains from funds received by individuals are taxed at a flat rate.
Dividend and Bunds Interest Income: Dividends from Egyptian companies and interest income from local banks are subject to withholding tax, with varying rates for residents and non-residents.
Rental Income: Taxable income from real estate rentals is determined after deducting a specified percentage from the actual rental value.
Understanding these tax regulations is crucial for accurate tax reporting and compliance.
Social Security Contributions:
Egypt mandates social security and social insurance contributions for both employers and employees to provide comprehensive benefit coverage. Here’s a summary of the contribution rates and other relevant details:
Aging, Disability, and Death Insurance: Contributions total 21% (9% by employees and 12% by employers).
Health Insurance: Contributions total 4.25% (1% by employees and 3.25% by employers).
Work Injuries: Employers contribute between 1.5% to 2% for work injuries.
Unemployment: Employers contribute 1% towards unemployment benefits.
End of Service Bonus: Contributions total 2% (1% each by employees and employers).
Insurable Salary: Monthly salary thresholds range from EGP 1200 to EGP 8100, adjusted annually based on inflation rates.
Exempted Allowances: Certain allowances, like meals and housing, are excluded from the insurable salary calculation, capped at 30% of the total.
Compliance with these regulations is essential to ensure proper benefit coverage and adherence to legal requirements for both employers and employees.
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