Employers in Egypt have a responsibility to contribute to the social insurance system for their employees. The total employer contribution rate is 24% of the employee's gross salary. This contribution is broken down into several categories:

• Old Age, Disability, and Death Insurance: 14%
• Unemployment Insurance: 2%
• Work Injury Insurance: 1%
• Health insurance: 7% (this includes contributions made by both the employer and the employee)

Contribution Caps

It's important to note that social insurance contributions are capped at a monthly maximum wage, which is currently around 12,200 EGP for the private sector. Contributions are only calculated up to this salary limit.

Reporting and Payment

Employers must register with the social insurance system, withhold employee contributions, add their own, and remit payments on a monthly basis. This is a crucial part of their tax responsibilities.

In Egypt, a progressive income tax system is in place. The current income tax rates are as follows:

• Up to 15,000 EGP (annual): 0%
• 15,001 EGP – 30,000 EGP: 2.5%
• 30,001 EGP – 45,000 EGP: 5%
• 45,001 EGP – 60,000 EGP: 10%
• 60,001 EGP – 200,000 EGP: 15%
• 200,001 EGP – 400,000 EGP: 20%
• Over 400,000 EGP: 22.5%

Starting from January 2023, an additional tax rate of 25% will be applied to annual income exceeding 1 million EGP.

Social Insurance Contributions

Employees in Egypt are required to contribute to the following social insurance schemes:

• Old Age, Disability, and Death Insurance: 11% of gross salary
• Unemployment Insurance: 1% of gross salary

Key Points to Remember

• Contribution Caps: Social insurance contributions are capped at a monthly maximum wage (currently around 9,860 EGP for the private sector). Contributions are only calculated up to this salary limit.
• Withholding: Employers are tasked with the responsibility of deducting income tax and social insurance contributions from their employees' salaries.

In Egypt, the standard VAT rate is 14%. However, certain categories of services might be exempt from VAT, including some essential goods and services.

VAT Liability for Services

When determining your VAT liability, consider the following factors:

• Place of Supply: The place of supply rules play a key role in determining where a service is considered to be supplied for VAT purposes. Different rules apply depending on the type of service, whether the customer is a business (B2B) or a consumer (B2C), and the location of both parties.

• Reverse Charge Mechanism: The reverse charge mechanism might apply in certain B2B transactions. This means that the Egyptian business receiving the service from a non-Egyptian supplier might become responsible for accounting for the VAT.

Important Categories of Services

• Electronically Supplied Services: If you provide digital services (software, streaming content, website subscriptions) to consumers in Egypt, you might be liable for Egyptian VAT, even if your business is located outside Egypt.

• Services Related to Immovable Property: Services with a significant connection to a property located in Egypt (e.g., construction, real estate services) usually fall under Egyptian VAT rules.

• Professional Services: Consulting, legal, and accounting services, when performed in Egypt or deemed supplied in Egypt, typically are subject to VAT.

VAT Registration and Reporting

• Registration Threshold: Businesses exceeding a specific revenue threshold within Egypt might be required to register for VAT. Currently, the standard registration threshold is 500,000 EGP annually.

• Filing and Payment: Registered businesses must file periodic VAT returns and make corresponding payments to the tax authorities in Egypt.

Egypt offers a competitive corporate income tax rate of 22.5%. Companies that reinvest profits into expanding operations in Egypt may be eligible for partial tax exemptions on reinvested amounts.

Investment Law No. 72 of 2017

Investment Law No. 72 of 2017 offers numerous incentives aimed at promoting investment and job creation. Newly established companies in designated sectors and areas may be eligible for a tax holiday of up to 5 years, which can be further extended for specific strategic investments. Businesses may also be able to deduct a percentage of their investment cost from taxable income. Companies operating in specific sectors may qualify for exemptions from customs duties on imported machinery and equipment.

Specific Sector Incentives

Companies operating in specific manufacturing industries may be eligible for a discounted income tax rate of 10%. Businesses investing in agricultural projects and land reclamation activities may receive tax holidays and reductions. Businesses operating within designated Special Economic Zones (SEZs) can enjoy benefits such as income tax exemptions, simplified customs procedures, and subsidized utility costs. Exporters may be eligible for tax rebates and other benefits depending on the type of products exported.

Important Considerations

Specific criteria must be met to qualify for the incentives. Your business activities, location, investment size, and other factors determine your eligibility. Tax incentives often require formal applications and approval from relevant government agencies, such as the General Authority for Investment and Free Zones (GAFI).