MAY 2020 – EGYPT
TAX CHANGES EFFECTIVE 1 JULY 2020
It is important that employers note the following:
Changes to Income Tax Rates and Personal Reliefs
On 7 May 2020 the Egyptian Government issued Law no. 26 of 2020, amending certain provisions of the Income Tax Law No. 91 of 2005 as follows:
- Article (8) of the law regarding the income tax rates applicable to natural persons (individuals)
- Article (13) of the law regarding the annual personal income exemption
- Article (87 Bis) of the law regarding the penalties applicable on the tax return differences.
In addition to the new progressive rates, the law increases the annual personal exemption from EGP 7,000 to EGP 9,000 and abolishes the discount on the highest income bracket of a taxpayer (85%, 45%, 7.5%, 0%).
The law also introduces new penalty provisions where the final tax liability exceeds the amount declared. If the difference is less than 50%, a 20% penalty applies, and if the difference is 50% or greater, a 40% penalty applies. A 40% penalty also applies if no return is submitted. In the event an agreement is reached between a taxpayer and the tax authority without initiating appeal procedures, these penalties may be reduced by half
The annual taxable income should be approximated to the nearest lower EGP 10.
Tax rates, effective 1 July 2020.
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