Wealthy Egyptians to Pay More Tax

May 14, 2013 Taxation in Egypt

Egypt is looking to secure a bailout loan from the International Monetary Fund through a series of tax changes aimed at boosting the tax revenues collected from individuals.

On May 13th, Egypt’s Shura Council approved a proposed amendment to the country’s personal income tax legislation to adjust the country’s income tax bracket to ensure that wealthy individuals pay more tax while low-income earners face a lighter obligation.

The legislative adjustment will see the top bracket for income taxes lowered from EGP 10 million to EGP 250 000 in order to include a much wider selection of taxpayers, however, the rate of the top tax bracket will remain at 25 percent.

Individuals earning below EGP 5 000 per annum will be exempt from income taxes.

The second income tax bracket, which previously only included those earning between EGP 5 000 and EGP 20 000, will be extended to include salaries of up to EGP 30 000, and the tax rate will be dropped from 15 percent to 10 percent.

Salary earners making between EGP 30 000 and EGP 45 000 will face a tax rate of 15 percent, while those being paid between EGP 45 000 and EGP 250 000 will be liable to pay a tax of up to 20 percent.

The changes still need to be approved by the President of Egypt Mohamed Morsi, and the changes will come into effect one months following the final approval.

It is expected that the changes will help Egypt in its bid to secure a USD 4.8 billion bailout loan from the International Monetary Fund, as the changes will demonstrate the government’s commitment to improving tax collections.

Photo by: watchsmart