The Ministry of Finance has confirmed that new amendments to the Income Tax Law 26/2020, are progressively establishing tax justice pillars, improving tax brackets, and addressing distortions in the tax-deduction based system. There will also be across-the-board tax savings.
These amendments also include increasing the tax exemption limit by 60%, as the basic exemption limit for each financier has been raised from EGP 8,000 to EGP 15,000. This comes in addition to increasing the personal exemption limit for salaries from EGP 7,000 to EGP 9,000, with those on an annual income of up to EGP 24,000 exempted.
In a statement, the ministry clarified that each citizen subject to the salary tax can calculate their own income tax monthly and annually according to the attached table. The table shows the percentage of tax savings compared to the current income tax law.
The statement added that the new tax system will be applied from the beginning of July.
The ministry added that the amendments also apply to income generated from commercial and industrial activity, and the revenues of non-commercial professions. It also applies to real estate wealth revenues starting from the tax period that ends after the date of the law’s enforcement.
The statement clarified that, according to these amendments, a new social segment was created for low-income people whose net annual income ranges from EGP 15,000 to EGP 30,000 other than the limit for personal exemption.
The tax for this salary range stands at 2.5%, with those from more than EGP 30,000 to EGP 45,000 will be subject to 10% tax instead of 15%. Those with salaries of more than EGP 45,000 to EGP 60,000 will be 15% against 20%, while those earning over EGP 60,000 to EGP 200,000 will be liable to 20% instead of 22.5%. Those with over EGP 200,000 to EGP 400,000 will pay 22.5%, and a new segment for higher-income has been introduced at 25%.
