File Photo: Bill raising annual income tax exemption. AFP
The bill also stipulates that individuals whose annual income exceeds EGP 1.2 million are to pay a higher income tax rate of 27.5 percent instead of the previous rate of 25 percent.
"This bill aims to achieve social justice by raising the annual income tax exemption threshold to EGP 36,000. It also aims to impose a higher income tax rate on high-income individuals," said the draft bill.
Finance Minister Mohamed Maait indicated that although the new exemption will cost the state treasury an amount of EGP 10 billion, the income tax imposed on people earning more than EGP 1.2 million a year will generate around EGP 4 billion.
"As a result, the net cost of these tax exemptions will stand at EGP 6 billion," said Maait, vowing there would be more income tax exemptions in the coming fiscal year to help support low and average-income groups.
In addition, the bill includes incentives and rewards for taxpayers. Individuals using the new e-invoicing system will receive a 5 percent incentive; whereas those reporting tax evasion crimes will be rewarded with 10 percent of the recovered amount.
Maait said the bill also introduces a simplified tax system for small and micro-scale enterprises whose value of transactions does not exceed EGP 10 million per year.
Furthermore, parliament approved amendments to law 182/2020, granting exemptions on returns from investment in treasury bills, bonds, and capital profits.
These amendments aim to support businessmen investing in the capital market and encourage trading on the stock market, Maait said.
"We are in constant dialogue with the business community and accountancy offices in order to draft a unified income tax law in the near future," said the minister.
He clarified that the Ministry of Finance has no intention to increase the tax on industrial and commercial profits, which currently stands at 22.5 percent.