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Sunday, 15 March 2020

Low earners to get larger-than-expected tax cut

LEGISLATION WATCH- Low income earners to get larger-than-expected tax cut on orders of President El Sisi: President Abdel Fattah El Sisi yesterday ordered the Madbouly government to provide larger income tax breaks to low-income earners under draft amendments to the Income Tax Act that will soon go up for a vote at the House of Representatives, according to a statement from Ittihadiya. The current amendments, which had been approved by the House Planning and Budgeting Committee last month, would have increased the income tax exemption threshold to EGP 14k and raised the upper limit of each tax band. The directions given by the president yesterday go a step further, raising the exemption threshold to EGP 15k, cutting the wage tax burden on those earning EGP 15-35k a year to just 2.5%, down from 10-15% currently.

It is unclear how this will affect the other tax bands, which according to the legislation that had already been reviewed by the house would have been as follows:

  • Those earning between EGP 14-40k would be taxed 10%;
  • Those earning between EGP 40-60k would be taxed 15%;
  • Those earning between EGP 60-200k would be taxed 20%;
  • Those earning more than EGP 200k would be taxed at 22.5%.

New raises: El Sisi also directed ministers to approve new annual raises amounting to 7% of the gross wage for public-sector employees whose employment is regulated by the Civil Service Act and 12% of the basic wage for state employees who are not covered by the act.

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