President Abdel Fattah Al-Sisi issued a decree on Sunday imposing a temporary tax on income, which amends the Income Tax Law 91/2005 and decree 44/2014.
The decree stipulates that the first tranche of income, up to EGP 6,500 per year, are exempt from the tax, but imposes a 10% tax on the second tranche that earns between EGP 6,500 and EGP 30,000 a year.
The third tranche, with salaries from EGP 30,000 to EGP 45,000 per year shall be subject to a 15% tax, with a fourth tranche of salaries exceeding EGP 45,000 to EGP 200,000 subject to tax of 20%. The fifth tranche, with salaries exceeding EGP 200,000 per annum, will be subject to a tax of 22.5%. Calculating taxes on the total annual net income is approximate to the nearest 10 pounds.
The decree also stipulated a 10% tax on companies and individual revenues, including economic zone companies, which is known as the capital gains tax.
The decree imposes an additional temporary annual tax for a period of one year, starting from the current fiscal year (FY) 2015/2016, of 5% on individuals or legal persons when their income exceeds EGP 1m per annum. This tax, which has become known as the rich tax, was cancelled by the government before the Economic Summit that was held in Sharm El-Sheikh in March.
On 11 March, the cabinet’s economic team approved the unification of Egypt’s income tax to a maximum of 22.5%, while maintaining the progressive tax for tranches.
According to the current state budget, the general revenues for the new fiscal year’s budget are expected to grow by 28%, amounting to EGP 622.2bn, as the tax is the largest source of state revenues.
The government is expected to increase tax revenues in the current budget by 32.9%, compared to the previous state budget for FY 2014/2015.
