Egypt’s Minister of Finance Mohamed Maait announced on Wednesday that the new income tax system is going to be applied as of FY2020/2021, which goes for the income earned from industrial and commercial activities, non-commercial professions, and real-estate revenues.
He said that the new system is in line with President Abdel-Fattah El-Sisi’s directives to achieve tax justice progressively and upgrade income tax quintiles to uplift the living standards of citizens.
In a statement, Maait said that income tax on individuals will be a fair bottom-up tax and will generate tax savings for the lowest, medium and upper medium income quintiles.
He added that the new tax system fixes the current system’s flaws, and it includes an increase of the tax exemption limit with 60 percent, as the basic exemption limit for every taxpayer has upped from EGP 8,000 to EGP 15,000 and the personal exemption on salaries limit has been raised to EGP 9,000, up from EGP 7,000.
Accordingly, the employees who earn up to EGP 24,000 annually are exempted from income tax. According to the new system, a new quintile has been allocated for low incomes, which their net annual income ranges between EGP 15,000 and EGP 30,000 with a 2.5 percent income tax.
Meanwhile, income taxes on individuals whose annual income ranges between EGP 30,000 and EGP 45,000 will be 10 percent instead of 15 percent, and those whose annual income is from EGP 45,000 to EGP 60,000 will be subjected to 15 percent income tax instead of 20 percent, according to Maait.
He added that income tax on individuals whose income ranges between EGP 60,000 and EGP 200,000 will be 20 percent instead of 22.5 percent. Maait also added that a new 25 percent tax quintile has been appropriated for the higher incomes.