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Thursday, 21 May 2020

Egypt to introduce 1% tax on all salaries to fund covid-19 fight

Cabinet plans 1% corona tax on all salaries, says measure would be in effect for one year starting 1 July 2020: The Madbouly Cabinet has approved a draft law that would require companies to dock 1% from all employees’ monthly salaries during FY2020-2021 to help fund efforts to contain the spread of the coronavirus, the Madbouly government announced in a statement yesterday. All public- and private-sector employees will face the tax, which would be in place for 12 months starting from the beginning of the upcoming fiscal year on 1 July. A separate 0.5% tax will be levied on state pensions during the same period.

Who will this affect? Everyone. Yesterday’s statement says that private sector workers, banking sector employees, civil servants, and employees of state-owned companies will all see 1% taken from their monthly salaries from July. Only people who earn below EGP 2k a month will be exempt from the levy.

What will the proceeds be used for? The money would be deposited into an account at the central bank and governed by rules to be drawn up by the cabinet. The better part will be earmarked for sectors and SMEs most affected by the pandemic, and the rest will be used to support vulnerable families and individuals, improve Egypt’s healthcare facilities, and fund medical research.

What’s next? The bill would need to clear the House of Representatives in a final vote at the general assembly, which is currently on a short recess until 7 June.

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