Egypt Approves Wealth Tax

May 12, 2014 Taxation in Egypt

wealth tax in egyptCAIRO – A new tax will help Egypt will help reduce inequality while raising extra revenues to be used for social programs.

Last week the Cabinet of Egypt approved a temporary new wealth tax of 5 percent lasting until 2016 to be paid by individuals earning more than EGP 1 million per year.

According to the Finance Minister of Egypt, the new wealth tax could results in the collection of up to EGP 3.5 billion per year.

The Minister said that the new tax will help the government to fund new social projects which benefit all sectors of society, while lowering the national budget deficit without negatively impacting low-income earners.

The tax will still need to be approved by President Adly Mansour, although this is expected to happen prior to the upcoming election on May 26th.

The wealth tax has received widespread support among taxpayers in Egypt, especially low-income earners and political activists, although business leaders have come forward to warn that the tax could actually further detract investors from Egypt, ultimately hurting the country over the long-term.

This is not the first time recently that Egypt has instated tax measures aimed at the wealthy in order to reduce inequality, as only last year the government introduced a 25 percent marginal tax rate to be paid by individuals earning in excess of EGP 10 million.

Photo by: Andrew A. Shenouda