Parliament wants to raise income tax for salaries exceeding EGP 500k per annum
LEGISLATION WATCH- Is the wealth tax coming back in a watered-down form? House Budget committee is looking to raise tax rate on salaries >EGP 500k p.a. to 25%: The House Planning and Budget Committee is looking into amending the income tax code bring back a wealth tax that would see salaries of more than EGP 500k per year taxed at a 25% rate against today’s 22.5%, Al Mal reports. MP Mervat Alexan, the architect of the suggestion, says it’s not a tax grab: She wants to cut taxes on lower income earners at the same time. Parliament had signed off on income tax cuts and raised the minimum threshold for exemptions earlier this month to EGP 8,000 a year. Egypt cut the top tax rate to 22.5% from 25% back in August 2015.
What Rep. Alexan apparently hasn’t figured out: Just about every single employee in Egypt is quoted a net salary, meaning a salary after businesses remit wage taxes, social insurance, et cetera. No salaried employee in Egypt remits a tax return of his or her own unless they have outside income, so the working poor would never feel the impact of her proposal.
Which brings us to the bigger issue here: As business owners, all of us need to stop quoting net salaries. Speaking only in terms of net, take-home salaries shields hides from your staff the true extent of their benefit package (and the real cost of labor to you, the business owner / manager): What you pay in taxes to employ them. How much your portion of their social insurance cost really is. Et cetera.