INDIVIDUAL TAXES
SIGNIFICANT DEVELOPMENTS
There have been no significant tax or regulatory developments to individual taxation in the past year.
TERRITORIALITY AND RESIDENCE
Earnings of individuals working in Egypt are subject to taxes regardless of the place of payment, provided it is related to work performed in Egypt. Earnings paid by the overseas entity for purposes other than work done in Egypt are not taxable. An individual is considered to be a resident in Egypt if the period of work in Egypt exceeds 183 days in any taxable year, or the individual's principal residence is in Egypt.
Residents and nonresidents are treated equally, except that nonresident foreign experts are not entitled to family relief or the deduction for undocumented expenses.
GROSS INCOME
Employee gross income/An alien is taxed on salary earned for work performed in Egypt regardless of where payment is made and regardless of whether it is remitted. The alien is not taxed to the extent compensation relates to services performed outside Egypt.
Alien employees are not taxed on reimbursements for their personal living expenses(food and housing) or their travel expenses a long they in travel status. Reimbursement for similar expenses of spouse and dependents is taxable income. School tuition fees, long-term living expenses and overseas and hardship (nature-of-work) allowances are taxable.
Capital gains and investment income/An alien is taxed on real estate capital gains realized in Egypt. Capital gains on the sale of Egyptian securities are not taxable.
Interest income received from local banks is not taxable.
DEDUCTIONS AND EXEMPTIONS
The items listed below are deductible for representation,(there is a maximum of ￡E4,000 for total representation, incentives and nature-of-work allowances).
1. Representation allowance up to ￡E2,500 per annum.
2. Family relief allowance (amended in 1998) of ￡E2,500 for married persons ￡E3,000 for married persons with children and ￡E2,000 for a single person.
3. 10% of gross pay less representation and nature-of-work allowances and special salary increase for all undocumented expenses and costs.
4. Special＂Social increment＂salary increase.
5. A nature-of-work allowance of up to ￡E480 per annum.
6. A ￡E2,000 tax exemption per annum.
7.Annual direct round-trip airfares for the employee.
8.Housing is exempt from salary if:
a: It is provided in cash or kind to experts working for more than 183 days in any calendar year; or
b: It is provided in a company guest house available for by all employees.
OTHER TAXES
Social security taxes/Expatriate employees working in Egypt are not subject to the social insurance scheme except in the following cases.
1. A treaty between Egypt and the expatriate's country is in force to insure the citizens of the other country in Egypt and vice versa.
2.The expatriate's work agreement covers a period exceeding one year.Additional taxes/Individuals making over ￡E18,000 (of taxable income) per annum are subject to an additional 2% tax(development duty tax ) on the excess.
TAX ADMINISTRATION
Returns/No tax year other than the calendar year is permitted. Husbands and wives must file separate returns.
Payment of tax/Employers must withhold taxes on a monthly basis and submit them to the Tax Department within the first 15 days of the following month.
TAX RATES
The first ￡E50,000 of annual salary is subject to tax at 20%; the excess is taxed at the rate of 32%.
Income such as real estate, professional, commercial, and movable property income is taxed at rates from 20% to 40% for income exceeding US$4,700(approximately L￡16,000).
Unified movable capital tax/Unified movable capital tax applies to all sources of interest income, foreign and domestic, and foreign-source dividends at a rate of 32%. Certain exemptions are available for domestic-source interest.
Development duty tax/Development duty tax is assessed at a rate of 2% on taxable amount for salary tax purposes less an exempt amount of ￡E18,000.
INDIVIDUAL TAX CALCULATION-TAX ON SALARY ONLY
Calendar year 1999
Assumptions
An alien and wife, two children; one spouse earns all the income.
Tax computation
Unified tax/
Gross income-(Includes transportation allowance, representation
Allowance and nature-of-work allowance)…………………………￡E 176,000
Less-Deductions:
Representation allowance(maximum)……………………2,500
Nature-of-work allowance deductible(maximum)……480
Social increment(if given) ………………………………0
10% of (176,000-2,980) for undocumented expenses 17,302
Tax-exempt amount……………………………………2,000
Family relief allowance(maximum)…………………………3,000 25,282
Taxable amount for unified tax purposes………………………………￡E 150,718
Unified tax thereon:
First 50,000 at 20%……………………………………10,000
100,718
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