To offset some of the negative effects of the COVID-19 pandemic on the economy, the President has approved a new legislation (Law no. 170 of 2020) referred as Solidarity contribution. This regulation requires employees and pensioners to pay to the tax authorities 1% and 0.5% of their net income, respectively.
This law will be applied for a temporary period of 12 months effective from August 2020. Employees and pensioners whose monthly net income is less than EGP 2,000 will be exempt from this contribution.
The executive regulations have not been released yet.
B. Statutory Compliance Release Date: August 13, 2020
C. Effective Date: August 01, 2020
Law 26 for 2020 introduces new progressive tax rates as provided below for taxability of employment income and accordingly amends the method for individual income tax liability effective July 01, 2020. The applicable progressive tax rates will depend on the taxpayer's level of annual income.
|Tax rate (%)
|Annual Net Taxable Income (EGP)|
|not exceeding 600,000||between 600,000 and 700,000||between 700,000 and 800,000||between 800,000 and 900,000||between 900,000 and 1,000,000||exceeding 1,000,000|
|up to 15,000||-||-||-||-||-|
|2.5||15,000 to 30,000||up to 30,000||-||-||-||-|
|10||30,000 to 45,000||30,000 to 45,000||up to 45,000||-||-||-|
|15||45,000 to 60,000||45,000 to 60,000||45,000 to 60,000||up to 60,000||-||-|
|20||60,000 to 200,000||60,000 to 200,000||60,000 to 200,000||60,000 to 200,000||Upto 200,000||-|
|22.5||200,000 to 400,000||200,000 to 400,000||200,000 to 400,000||200,000 to 400,000||200,000 to 400,000||Upto 400,000|
|25||exceeding 400,000||exceeding 400,000||exceeding 400,000||exceeding 400,000||exceeding 400,000||exceeding 400,000|
Further, the annual personal exemption is increased from EGP 7,000 to EGP 9,000.
B. Statutory Compliance Release Date: May 12, 2020
C. Effective Date: July 01, 2020
The Egypt Government has amended the below mentioned reports under New Social Insurance and Pension Act, 2020:
- Form 1 – New hire registration form
- Form 6 – Employee deregistration form
- Form 2 – Annual form including employees’ names, salaries and dates of birth and hiring dates
B. Statutory Compliance Release Date: N.A
C. Effective Date: January 01, 2020
Further to a brief overview update in August 2019 on the Egypt’s Social Insurance and Pension Act, the General Social Insurance Authority recently issued instructions confirming the minimum and maximum salary caps applicable to contributions payable by employers and employees under the new Social Insurance and Pension Law.
The Act, which covers almost all categories of workers like temporary and seasonal, expatriates, provides for a contribution of 29.75% of an employee’s total salary (excluding certain exempt allowances), allocated as follows:
|Insurance type||Employer share (%)||Employee share (%)|
|End of service bonus||1||1|
Note: Monthly pay: Salary paid excluding amount paid for conveyance, food, clothing, housing, living benefits and likes of rewards, incentives and bonus (Article 2). Exemptions cannot exceed 25% of the total salary
Benefits to be provided are categorically stated in the schedules to the Act. This depends on the salary and period of service. Similarly, benefits on account of disability depend on the percentage of disability and illness.
The instructions confirm that the initial minimum and maximum monthly salary caps are EGP 1,000 and EGP 7,000, respectively. Both caps will increase by 15% annually for the next seven years. The rate of increase for 2028 and subsequent years will be based on the actual inflation rate.
We are seeking further information on terminology used, reporting & registrations from Deloitte under this Act and shall update accordingly.