Section Items

⇒ Payroll Tax

I. Payroll Tax Scope

The tax applies to all earnings by a taxpayer resulting from work for third parties, with or without a contract, on a regular or irregular basis, regardless of such dues names, forms or reasons, whether they are for works performed in Egypt or abroad, and the consideration thereof was paid from a source in Egypt, including wages, bonuses, incentives, commissions, grants, additional payments, allowances, dividends or shares in profits and *cash and in-kind benefits of all types.

Salaries and remunerations of non-shareholding chairpersons and board members of public sector and public business sector companies.
 

Salaries and remunerations of chairpersons, board members and managers of corporations in return for their administrative work.

* Cash and in-kind benefits include amounts received by an employee in cash or in-kind that are not a reimbursement for costs associated with the job, which represent a personal benefit. The value of the benefit in-kind is the market value of the item given; it is worth nothing that the Executive Regulations specifically determines value of some such benefits as follows:

  – Company cars at the personal disposal of the employee: The benefit value is equal to 20% of the cost of fuel, insurance, and periodic maintenance with respect to such cars, whether owned by the company or leased.

  – Cellular Phones: The benefit value is equal to 20% of the related phone expenses throughout the year.

  – Loans and advances offered by employers: The value of the benefit is determined at 7% of the loans and advances in the case of a loan in any form that exceeds the gross income received by an employee during the six months immediately prior to the receipt of the loan. Or
The difference between value of the interest under the given loan and the 7%, stipulated by law, if the interest rate charged is less than 7%.

  – Life insurance policies for the employee, his family or his properties: The benefit value is equal to the amount of the premiums paid by the employer each year.

  – The company’s stocks granted at a value less than the stock market value:
The benefit value is determined on the difference between the stock market value and the value required to be paid by the employee, taking into account that the restricted benefit shall not be included in the income of the employee until those restrictions have expired or are otherwise removed.
II. Annuity of Taxation:

– Tax on salaries and the like is annual revenues included in the taxable base shall be determined for each part of a year in which any taxable revenue was earned in proportion to a year, based on the monthly revenue after transferring it to annual revenue.

If a change occurs in the taxable base, the calculation of the base shall be adjusted from the date of change based on the new or old base, whichever is less, after transferring such to annual revenue. The employer may calculate the tax base on the basis of the new revenue, provided the employer shall maintain the due tax on the difference between the new and old revenue to the account of the employer with the purpose of making the adjustment at the end of the financial year.

Block salaries, wages and the like paid in a single payment in a specific year must be apportioned among the years of entitlement, after excluding payments in lieu of vacations. Income included in the tax base must be recalculated for each year, and the tax due shall be adjusted accordingly.

*Disclaimer: This material has been prepared for general informational purposes only and is not intended to be relied upon as legal, accounting, tax or other professional advice.