Taxes in Egypt may be divided into two categories. The first one concerns direct taxation of individuals and legal entities on their income or profit. The second involves indirect taxation of goods, services and events. The Egyptian taxation framework is statutory based. Tax administrators are given, under the relevant legislation, few discretionary powers. Courts are primarily responsible for the interpretation of statutes. The nature of the Civil Law system operating in Egypt allows precedent to have an influential but not necessarily a binding effect. Over the last several years, Egypt has made many changes in its tax system.
Fiscal year: The fiscal year begins on January 1-st and ends on December 31st of the same year.
Egypt Income Tax RatesThe new tax law in Egypt has unified the ceiling of tax exemption of both single and married employees with children. The progressive tax rates of the individual income tax varies to 20% according to the tax bracket.
LE1 - 5,000: 0%
LE5,001 – 20,000: 10%
LE20,000 – 40,000: 15%
LE40,000+: 20%
Personal Income tax exemptions are on the following:
- An Amount of LE4,000 as an annual personal exemption for the taxpayer.
- Social Insurance
- Employees' contributions to the private insurance funds established according to the Private Insurance Funds Law 54/1975
- Life and health insurance premiums
- Collective allowances
- Workers' share in the profits to be distributed
- All that is obtained by members of diplomatic or consular corporations
Taxation of Non-Commercial Profession:
A wider range of professions shall be taxed, under the title "non-commercial professions", for example plumbers, technicians, mechanics, hairdressers, doctors and lawyers. However, they would enjoy a 3-year tax exemption.
These include the following:
- Legal Profession
- Medicine
- Engineering
- Journalism
- Composition of scientific and literary compilations
- Accountancy and auditing
- Translation
- Expertise
- Religious reading and recitations
- Drawing, sculpture and calligraphy
- Singing, music playing and composing, dancing, acting and filmmaking.
- Modeling
- Customs clearance
- Weigher's trade
Deductible Costs:
- Registration fees & fees for exercising the professions
- Other taxes in the course of exercising the profession
- Pension scheme amounts
- Life and heath insurance
Total tax exemption given to the taxpayer shall not exceed 15% of the net income or LE3,000, whichever is more but not exceeding the actual amount paid.
Donations that are granted to the government, NGOs, educational establishments and hospitals are deducted from the new revenues provided that they shall not exceed 10% of the annual net revenue.
Egypt Corporate Income Tax RatesMost Firms: 20%
Suez Canal Profits: 40%
Egyptian Petroleum Authority: 40%
Central Bank of Egypt: 40%
Oil Exploration & Production Companies: 40.55%
Deductible costs and expenses:
- Interests on loans
- Depreciation of the establishment assets
- Duties & taxes borne by the establishment except for corporate tax.
- Social insurance premiums settled to the National Social Insurance Authority in favor of the workers or in favor of the establishment's owner.
- Amounts that the establishment deducts annually from its funds or profits, up to and not exceeding 20% of total salaries and wages of the workers, on the account of private saving, pension funds or others according to the Private Insurance Funds Law 54/1975 or Law 64/1980.
- Insurance premiums against disability or disease, which shall not exceed LE3000.
- Donations and aids to the government and Egyptian non-governmental institutions with the maximum of 10% of the net profit.
- Financial penalties as a result of contractual liability.
Costs and expenses that are not considered deductible:
- Reserves
- Financial fines and penalties against the taxpayer
- Income tax payable according to the current law
- Interests settled on loans, which exceed twofold the credit and discount rates announced by the Central Bank
- Interests on loans and debts paid to tax exempted entities
Egypt VAT [General Sales Tax (GST)] RatesStandard rates: The General Sales Tax (GST) applies to the sale of most products. The GST rate is 10%, except for some products :
- 25% to televisions, radios, jewellery and certain motors vehicles ;
- 30% to luxury goods such as cosmetics, video cameras, and high-value vehicle.
Exemptions include basic foodstuffs, restaurant food, natural gas, books and magazines, and goods used for scientific, educational and cultural purposes.
Reduced rates:
5% or 10%, depending on their type :
- 5% to some foodstuffs, fertilisers and locally produced medicines ;
- 10% to hotel and tourism services, specific international communications and certain services.
Excise duty is also collected on alcoholic drinks and coffee. An additional duty is collected on brandy, cognac, gin and whisky.
Egypt Other TaxesReal Property Tax
Real Estate taxes are levied on the assessed annual rental value of improved and agricultural property at rates ranging between 10 percent to 40 percent.
Stamp Duty
Most classes of documents, contracts, checks, receipts, bills, letters of guaranty, various banking transactions, transfer of unlisted securities, leases and many other instruments require payment of stamp duties. For example, between E150-E300 of stamp duty is charged upon the formation of companies, E50 is charged for the registration of companies in the Commercial Registrar and E0.01 is levied on bank checks.
Withholding Taxes
There are no withholding taxes as such in Egypt, apart from scheduled income taxes which are withheld at source in many cases. Dividends distributed by an Egyptian company are not subject to withholding tax. The main instances where taxes are withheld are summarized below.
Tax on income derived from moveable capital is withheld in many cases, including payments to a foreign company that has no branch in Egypt and payments to non-resident individuals. Royalties and technical assistance fees paid to a foreign company with no branch in Egypt are normally subject to the 40 percent corporate income tax rate. The tax is imposed on the net amount after an arbitrary deduction for expenses. Amounts are also withheld on account of taxes due at 10 to 15 percent on the amount payable for professional services, at 3 percent on commercial services and at 10 percent on commissions paid to commercial agents. Lastly, employers must withhold the scheduled tax on salaries and wages from their employee's pay.
Inheritance and Gift Taxes
Succession tax is imposed on gifts and inheritances at rates between 3 to 15 percent. No tax is charged on an inheritance of less than E 10,000. Resident foreigners are subject to inheritance and gift taxes on real estate and moveable assets. Non-residents are subject to these taxes only on real estate assets located within Egypt.
Development Duty
A 2% development duty is levied on the annual taxable income of individuals and companies that exceeds E 18,000.
Social Insurance Contributions
Employers and employees must pay social insurance contributions to the Ministry of Social Insurance and Social Affairs. The social insurance laws do not apply to expatriates. The rate paid is based on the employee's monthly salary and is contributed to at a rate of 26 percent by the employer and 14 percent by the employee.
Sales Tax
Law No. 11 of 1991 provides for a general tax on sales. The tax applies to most goods and certain types of services (mainly tourism, telecommunications and entertainment services). Goods imported from abroad for commercial purposes are also subject to the tax. The tax rate for goods ranges from 10 percent (the general rate) up to 50 percent for certain specified goods. The tax rate for services ranges from 5 to 10 percent. The tax is added to the price of the goods or services in question and is payable by the consumer at the point of sale and remitted by the billing entity to the tax authorities.
Egypt - General Tax Exemptions- Profits of land reclamation or cultivation establishments for a period of 10 years.
- Profits of establishments of poultry production, bees breeding, cattle breeding, fattening pens, fisheries and trawlers projects for a period of 10 years.
- Profits of securities investment listed in the Egyptian Stock Exchange.
- Interests of all kinds of debentures and finance bonds listed in the Egyptian Stock Exchange.
- Dividends of the shares of the capital of the joint stock, limited liability companies and partnerships limited by shares obtained by individuals.
- Dividends of the investment securities issued by the investment funds.
- Returns from deposits, savings accounts…etc. in Egyptian banks.
- Profits realized from the new projects established by finance from the Social Fund for Development for a period of 5 years.
- Interest on loans and credit facilities obtained by the government from sources abroad.
- Interests obtained on securities issued by the Central Bank of Egypt.
- Revenues from writing and translating religious, scientific, cultural and literary books and articles.
- Revenues of members of teaching staff in the universities, institutes and others as realized from their books & compilations.
- Revenues of members of the plastic artists association from production of works of photography, sculpture and craving arts.
- Revenues of free professionals that are registered as active members of trade unions in their field of specialization for a 3-year period.
Tax Exempted Entities
- Ministries and government administrations
- Non-profit educational establishments
- Non-governmental organizations established according to law 84 of 2002
- Non-profit entities that are exercising social, scientific, sporting or cultural activities
- Profits of private insurance funds under law 54 of 1975
- International organizations
- Educational establishments under government supervision
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