1. Corporate Income Tax (CIT)
Egypt imposes corporate income tax on companies earning income within its borders.
Key Points:
- Standard Corporate Tax Rate: 22.5% for most businesses.
- Special Rates: Oil and gas companies are taxed at 40.55%.
- Branch Tax: Foreign branches operating in Egypt are taxed at the same rate as local entities.
| Corporate Tax Rate | Rate (%) | Applicable Entities |
|---|---|---|
| Standard CIT Rate | 22.5% | Most businesses operating in Egypt |
| Oil & Gas Sector | 40.55% | Oil and gas extraction companies |
Compliance Notes:
- Corporate tax returns are filed annually, with deadlines usually within four months after the fiscal year’s end.
2. Value Added Tax (VAT)
Egypt’s VAT system applies to goods and services at a standard rate, with certain exemptions for essential sectors.
Key Points:
- Standard VAT Rate: 14%.
- Exemptions: Healthcare, education, and financial services are VAT-exempt.
- Zero-Rated Goods: Exports and specific transactions are taxed at 0%.
| VAT Type | Rate (%) | Applicable Goods/Services |
|---|---|---|
| Standard VAT Rate | 14% | Most goods and services |
| Zero-Rated VAT | 0% | Exports, certain essential goods |
Compliance:
Businesses exceeding a turnover threshold must register for VAT and file monthly returns.
3. Withholding Tax
Withholding tax applies to payments made to residents and non-residents, including dividends, interest, and royalties.
Key Points:
- Dividends: 10%, reduced to 5% under certain conditions.
- Interest and Royalties: 20%, unless reduced by a tax treaty.
| Income Type | Withholding Tax Rate (%) | Residency Requirement |
|---|---|---|
| Dividends | 10% (or 5%) | Residents and non-residents |
| Interest | 20% | Non-residents |
| Royalties | 20% | Non-residents |
Compliance:
Taxes must be withheld and remitted to Egyptian tax authorities within a specified timeframe.
4. Personal Income Tax (PIT)
Egypt’s personal income tax system follows a progressive structure based on income levels.
Key Points:
- Rates: Range from 0% to 25%, depending on annual income.
- Exemptions: Certain allowances and benefits are tax-exempt.
| Annual Income (EGP) | Tax Rate (%) |
|---|---|
| Up to 15,000 | 0% |
| 15,001 – 30,000 | 2.5% |
| 30,001 – 45,000 | 10% |
| 45,001 – 200,000 | 15% |
| Over 200,000 | 25% |
Compliance:
Employers must deduct PIT from salaries and remit it monthly to the tax authority.
5. Social Insurance Contributions
Social insurance is mandatory for all employees in Egypt, covering pensions and other benefits.
Key Points:
- Employer Contribution: 18.75% of the employee’s salary.
- Employee Contribution: 11% of their salary.
| Contribution Type | Employer Rate (%) | Employee Rate (%) |
|---|---|---|
| Social Insurance | 18.75% | 11% |
Compliance:
Contributions must be submitted monthly to the National Organization for Social Insurance (NOSI).
6. Tax Incentives and Exemptions
Egypt offers a range of tax incentives to encourage investment in priority sectors.
Key Incentives:
- Free Zones: Tax exemptions for companies operating in designated free zones.
- Investment Law Incentives: Reduced tax rates for specific industries like renewable energy and technology.
Compliance Notes:
Eligible businesses must maintain proper documentation and adhere to sector-specific regulations.
7. Filing and Compliance Deadlines
Adherence to filing deadlines is critical to avoid penalties.
| Tax Type | Filing Frequency | Deadline |
|---|---|---|
| Corporate Income Tax | Annual | Within four months after fiscal year |
| VAT | Monthly | By the 15th of the following month |
| Social Insurance | Monthly | By the end of each month |
Penalties:
Late submissions result in fines and possible interest charges on unpaid taxes.
Final Thoughts
Egypt’s tax landscape is complex but manageable with the right expertise. Leveraging an EOR solution like GlobainePEO simplifies compliance, enabling businesses to focus on growth while adhering to local regulations. Understanding Egypt’s tax requirements ensures smooth operations and minimizes legal risks.