Parliament’s planning and budgeting committee approves Income Tax Law draft amendments

Mohamed Samir
3 Min Read

The Parliament’s planning and budgeting committee has approved the draft amendments to Income Tax Law prepared by the government, adding only a few adjustments and suggestions. The amendments now await discussions in the House of Representatives, before final approval is given on Tuesday.

The committee’s report showed that it has decided to abolish the tax deduction system, and introduce revised tax brackets in its place.

The draft law also raises the base personal tax exemption to EGP 15,000 from the current EGP 8,000. The committee has also put forward the recommendation raising the personal threshold for salaried employees to EGP 9,000. A new tax bracket has also been included for those who receive salaries of over EGP 400,000 a year.

The new brackets for income tax are:

EGP 0-15,000: annually exempted

EGP 15,001-30,000: 2.5%

EGP 30,001-45,000: 10%

EGP 45,001-60,000: 15%

EGP 60,001-200,000: 20%

EGP 200,001-400,000: 22.5%

More than EGP 400,000: 25% (new tax bracket)

What does that mean?

To understand how tax brackets work, let’s say you earn EGP 100,000 annually. You would pay 0% on the first EGP 15,000 of your earnings, then 2.5% (or EGP 750) on the chunk of earnings from EGP 15,001 to EGP 30,000, 10% on the chunk from EGP 30,001 to EGP 45,000 (or EGP 1,500), 15% on EGP 45,001-60,000 (EGP 2,250), and 20% on the remaining income between EGP 60,001 to EGP 100,000 (EGP 8,000).

The total tax bill would be EGP 12,500 on your EGP 100,000 income. This means the effective tax rate in this example would be 12.5%, which is lower than the 20% bracket you are in. In case you are salaried employee, a further EGP 9,000 will be excluded so the tax bill would be EGP 3,500 or 3.5%.

The committee added some restrictions to the implementation of effective tax rates to ensure fair taxation.

If the annual income is between EGP 600,000-700,000, the EGP 15,000 exemption would not be applicable. If the annual income is from EGP 700,001-800,000, the 2.5% bracket would not be applicable, and from EGP 800,001-900,000 the 10% bracket would not be applicable. For incomes between EGP 900,001- EGP 1m, the 15% bracket would not be applicable, and for incomes exceeding EGP 1m annually, 20% bracket would not be applicable.

This, in turn, means that if your income is EGP 1.1m, the effective tax rate would be the same as your tax bracket of 25%.

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Mohamed Samir Khedr is an economic and political journalist, analyst, and editor specializing in geopolitical conflicts in the Middle East, Africa, and the Eastern Mediterranean. For the past decade, he has covered Egypt's and the MENA region's financial, business, and geopolitical updates. Currently, he is the Executive Editor of the Daily News Egypt, where he leads a team of journalists in producing high-quality, in-depth reporting and analysis on the region's most pressing issues. His work has been featured in leading international publications. Samir is a highly respected expert on the Middle East and Africa, and his insights are regularly sought by policymakers, academics, and business leaders. He is a passionate advocate for independent journalism and a strong believer in the power of storytelling to inform and inspire. Twitter: LinkedIn: