The Egyptian Parliament finally approved, in its plenary session on Wednesday, a draft law submitted by the government to amend some provisions of the Income Tax Law.
The draft law stipulated amending Article (13) to make those who receive a wage of EGP 24,000 annually exempt from taxes, by raising the limit of personal exemption to EGP 9,000 instead of EGP 7,000.
The draft law abolished the tax deduction system and replaced it with more fair one, adopting progressive taxation according to the level of income and direct support to lower-income segments and reduce the tax burden on them by raising the exemption limit from EGP 8,000 to EGP 15,000, in addition to EGP 7,000 personal exemption for employees, bringing the total exemption to EGP 22,000 annually.
In its report, the Plan and Budget Committee recommended that the personal exemption limit be raised to EGP 9,000, bringing the total exemption to EGP 24,000 annually, which was approved by the deputies in the plenary session on Tuesday, and was included in the amendments.
The draft law also included the creation of a social segment to support the lower-income classes. Inpiduals with income up to EGP 37,000 annually will pay only 2.5% of income tax, and earners of more than EGP 400,000 annually will pay 25%.
Moreover, the draft abolished the tax deduction system currently in place to remove distortions in the progressive tax. Also, income brackets were revised to ensure more tax justice, and prevent the wasting of tax revenue by reorienting subsidies only to those who are entitled to them, and introducing a new tax rate for income.
Members of the House of Representatives agreed to amend Article 87 to achieve the principle of equality among investors by subjecting all financiers to the text of the article and excluding exceptions, as well as introducing a new law that end disputes with the Tax Authority without resorting to appeals committees by offering the advantage of reducing the amount of the fine in half.
Income taxes goes as follows:
0% for the EGP 15,000 salary bracket
2.5% for the EGP 15,000-EGP 30,000 salary bracket
10% for the EGP 30,000-EGP 45,000 salary bracket
15% for the EGP 45,000-EGP 60,000 salary bracket
20% for the than EGP 60,000-EGP 200,000
22.5% for the than EGP 200,000-EGP 400,000
25% for the than EGP 400,000
The bill also laid down additional rules if the net annual income exceeds EGP 600,000, the taxpayer is not entitled to benefit from the exempted segment. The draft law will come into effect as of July 2020 after the date of its publication in the Official Gazette.