Morsi signs Egypt's new income tax law

Amendments to Egypt's income tax law come amid a slew of measures to boost the country's economy. Above, traders work at the Egyptian stock exchange building in central Cairo. [Khaled Desouki/AFP]

Amendments to Egypt's income tax law come amid a slew of measures to boost the country's economy. Above, traders work at the Egyptian stock exchange building in central Cairo. [Khaled Desouki/AFP]

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Egyptian President Mohamed Morsi on Tuesday (May 21st) signed an amended income tax law, in the government's latest move to increase tax revenue for the current fiscal year.

The Shura Council, Egypt's top legislative authority, approved the amendments last week.

The new law groups taxpayers into five segments, exempting from taxes those whose annual income is less than 5,000 Egyptian pounds ($716); setting a 10% tax rate on incomes from 5,000 to 30,000 pounds ($716 to $4,294); a 15% rate on incomes from 30,000 to 45,000 pounds ($4,294 to $6,440); 20% for those earning 45,000 to 250,000 pounds ($6,440-$35,780); and 25% for incomes exceeding 250,000 pounds.

The new tax schedule is slated to go into effect with the disbursement of June salaries, said Sami Khairy of the Central Administration for Tax Inventory.

"The new amendments took into account the pressing social and economic conditions, and some exemptions were adopted," he told Al-Shorfa, noting the amendments pertain to Income Tax Law No. 91 of 2005.

Tax revenues are rising, with sales and income tax revenues combined reaching 161 billion pounds ($23 billion) for the period July 2012 through mid-May 2013, compared to 158 billion ($22.6 billion) in the same period of the previous fiscal year, Khairy said.

Tax revenues are expected to reach up to 200 billion pounds ($28.6 billion) by the year's end, he said.

The Ministry of Finance, in collaboration with private banks, also is giving taxpayers the option of paying their taxes online via the Tax Authority website, which offers a number of services as well as tax-related information, Khairy said.

'Fair and just amendments'

"The amendments to the tax law are fair to low- and middle-income Egyptian citizens, and thus achieve real social justice," said Ali Sharaf of the Egyptian Financial Supervisory Authority's research and development department.

He told Al-Shorfa he expects the new amendments to boost the Treasury.

The amendments were "necessary in this period to accompany the new disposition towards subsidising some consumer goods and fuels, which may help with IMF negotiations for the pending $4.8 billion loan", he said.

The International Monetary Fund (IMF) has set deficit reduction as a prerequisite to granting the Egyptian government the loan.

Among notable amendments to the tax law, according to Sharaf, was setting all corporate tax rates at 25%. Previously, companies with income less than 10 million pounds ($1.4 million) had a 20% tax rate and companies with income greater than that had a tax rate of 25%.

"These amendments added a competitive advantage to Egypt among African countries, whose corporate tax rates [are as high as] 28.6%, an advantage that is expected to attract investment capital in the coming period," he said.

Amendments 'narrow' in scope

Cairo University economics professor Mahmoud Sultan said the new amendments are "narrow [in scope]" and "it would have been more beneficial if they provided more [tax] segments".

The second segment, for example, which covers incomes from 5,000 to 30,000 pounds, does not do justice to people with lower incomes, he said, but is fair to people whose income touches the upper limit. "It would have been more beneficial to split that segment into two," he said.

"In order to support handicrafts and small businesses, those categories should have been included in the exempted segment so as to restart the economy and the production process," he said.

Despite Sultan's reservations about the amendments, he said proceeding with their implementation is "extremely necessary, as this reflects a serious government policy that lays a sound and clear economic foundation and provides evidence of the stability of the tax system".

This "will encourage new investors to enter the Egyptian market and restore confidence in Egypt's economic policy", he said.

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    فارس معتـز

    2013-6-16

    This will really be the fastest president to be hated and toppled by his people, so let those of us who will live tell the other Egyptians. It is impossible to introduce these taxes in this manner; doesn’t he feel for the Egyptians?? Are there any Egyptians earning less than 5,000 who can be exempted from paying this tax? Even if people do not understand anything and even if the government comes up with heavy taxes, they will start to say that Mubarak was better. But that will not happen unless Mursy remains in power and these taxes are officially introduced.

  • احمد سويدان

    2013-6-16

    Why couldn't Morsi find any alternative other than imposing taxes on the public? From where will the Egyptians get the money? I think it is unfair for the Egyptians to keep paying taxes with the introduction of the new income tax. There are other avenues through which Morsi can enhance the Egyptian economy. However, we see that Morsi is either taking taxes from the public or asking developed countries for loans and grants. Also, there are absolutely no projects that are implemented in Egypt in order to increase investment because Morsi has no plans for such projects. I feel Morsi is really trying to take everything from Egyptians and I think he considers the Egyptians as the cash cow that can supply him with money continuously through taxation. But the big problem is that the Egyptians are not really a cash cow as Morsi thinks. On the contrary, the Egyptians are poorer than poor and I think that can be seen clearly through the economic conditions of the Egyptians. This is because all problems facing the Egyptians are economic in nature, so it is absolutely impossible that taxes will provide the solution. Since the introduction of the new tax, the Egyptians have been confused as to how to make it work because all of these burdens will rest squarely on the shoulders of the Egyptians. Ultimately, the Egyptian government is going far and wide just to collect taxes, but then none of the government officials really asked themselves how the Egyptians will be able to pay these taxes since they have no stable source of income that could form the tax base. We are really fearful that President Morsi will continue doing these things without taking care of Egyptians at all. So long as introducing the new income tax is in his interest, he will implement it regardless of what will happen to the Egyptian people.

  • عبد الرحمن الشهرى

    2013-6-13

    O’ People of Egypt, you must be patient. Morsi meant to apply this public tax with this ascending form on tax categories in order to generate funds to build and reconstruct the Egyptian state in all the sectors. It’s enough that Egypt is suffering from a major problem, that is unemployment and housing, and such problems require huge financial resources. The Egyptian resources include the taxes, and therefore there’s nothing wrong with Morsi and in the Islamic regime, so that some people would want to distort their image for ratifying the taxes law. In all the countries of the world, people are paying taxes, and what Morsi has to be questioned about is not taxes but what they will offer from developments in all aspects like health care and other aspects. Furthermore, these problems require material solutions and all the categories of the society must actively participate in the process of paying taxes and not to violate or avoid that. A severe legislation must be issued to punish all the people who don’t pay taxes, and there must be mechanisms to implement that in order to ensure justice in the process of taxes payment, so that all the people pay their taxes according to the texts of the law. Also, so that we don't hear later about tax settlements. It is not fair for tax to be deducted for some person forcing him to pay because honest Egyptians who provide their tax statement and pay according to it as indicated by the law will be affected when the Egyptian government uses double-standards.

  • رائد نادر

    2013-6-13

    We support all the decisions of the President Mohamed Morsi, because we need him to solve our economic problems which obstacle the Egyptian people, and the government imposed new income taxes on the citizens, which will greatly contribute to promote the Egyptian economy by the Egyptians themselves. We thank President Mohamed Morsi for his efforts in this regard.

  • سلطان وسيم

    2013-6-13

    God! Following the approval of the Egyptian president Muhammad Mursy of this new law introducing the new income tax, the public are all angry. President Mursy is trying to collect as much money as possible from the Egyptian people as if the Egyptians are the only ones who are supposed to bring money to the government. Therefore, I call upon the president to think hard about other solutions that are different than the new income tax law.

  • امل عثمان

    2013-6-13

    The president, Dr. Mursy, is trying to improve Egypt one step at a time, and that is because he really wants to see Egypt at the highest possible level. This, of course, will never be possible without the help of the Egyptian people and the president has no other source to recourse to other than introducing a new income tax. Therefore, the Egyptians should understand that they are the ones who can change the course of Egypt. We all know the crises that are facing us, but the president is trying to end all of these crises, particularly the ones that are related to taxes. This is because there are Egyptians who are neither employees nor do anything for living and are still taxed and lose so much money that they can’t lose. However, they are compelled because they want to comply with the law. Thus, the president saw that there is injustice when it comes to tax payment and that there are many Egyptians who never pay taxes in the first place despite earning several times more than those who pay taxes. As a result, the solution was to adopt the new tax law since it sets the ground for certain principles that the Egyptians should follow. However, in spite of the efforts that is done for the sake of Egyptians, we still see that the Egyptians refuse to hear anything that is related to taxes as if though we don’t know that taxes are of utmost importance to the government. Why all Egyptians run away from taxes? Perhaps this law will rescue those Egyptians who earn less than 5,000 pounds from taxes completely. I think that there are some Egyptians whose earnings are no more than 2,000 pounds to begin with. Hence, this gesture made by the president shows that he feels for all classes of the society, but there will not be many Egyptians with high earnings, by the way.

  • عبد الوالي طلال

    2013-6-11

    The Suez Canal is the most important international facility that is helping revive trade and industry among the countries of the world and has shortened the distance between east and west. It has saved time, effort and money. The Suez Canal may be more important to the world than the Nile River, which grants life only to the countries of the Nile Basin. But the Suez Canal is useful to the whole world, because it has reduced the cost of goods and raw materials, which are to the benefit of all the peoples of the globe. If we imagine the world without the Suez Canal, and ships taking months and years to cross the oceans and go around the Cape of Good Hope, that was when many goods and materials and services were very expensive. The citizen couldn't afford the costs and the high expenses of the raw materials and goods that were transported back then.

  • شاكر علاء

    2013-6-11

    No doubt the Brotherhood is worried; the first sign of worry is their campaign. If they trust strongly that President Morsi is liked by the people, why did they conduct their campaign? Even if the campaign can't remove Morsi, it is enough that it appears in front of the people and the world that his opponents are more numerous than those who voted for him. Let him show us his good management in front of the people, who hate to behave with dignity…rebellion, rebellion, rebellion… certainly we'll leave, God willing.

  • حليم أيمن

    2013-6-11

    A revolution against an elected president before the end of his term is different from a revolution against a president or dictatorship. Election means that you have chosen and regardless of your bad choice, you are obliged to stick to the results until there is a chance of reelection. But to elect a president then change your mind in the middle of his time at office would be chaos, because the supporters of this president will not remain silent. Things will become chaotic.

  • بدر أدهم

    2013-6-11

    The tax law is one of those laws which are given to the council and are amended whenever there is a need to amend them. Amendments should not be made and then disregarded as was the case earlier when it was said that it is necessary to implement the value added tax as a result of the amendments introduced to the sales tax law. The ministry of finance has been threatening to go ahead with this matter for long years until now, and that is a grave mistake. In addition, the ministry threatened that it will raise the bar for tax registration without any implementation due to indifference, or without amending or seeking the advice of the country’s legislative authorities.

  • شاهرمنصور

    2013-6-11

    Taxes are either progressive tax or proportional tax. The philosophy behind the progressive tax lies in the fact that there is no fixed price tag on the entity subject to taxation but rather the tax varies as the value of the tax base increases. This concept is more consistent with fairness, and the reason is because progressive taxation is a tool that serves to fulfill the goal of taxation as it balances between the tax burden and taxpayer's resources. It is used as a tool to facilitate income and wealth redistribution and is considered an economic direction tool.

  • عبد العزيز مساعد

    2013-6-11

    Your Excellency the minister, is it necessary that you seize the salary increase that one was awaiting? If you now impose taxes, will you give me a decent pension when I retire or will the services provided by the government be free? Will the hospitals that all charge fees now be free? Will the schools, school books and private tuitions be free? Every state sector takes money from the poor people and provides bad services. If you search, you will find. I pay money for getting a license for my car and I also pay money when I’m entering other governorates, but all the roads are so bad that they could claim your life.

  • نافع عمر

    2013-6-11

    How long will the government continue to take money from the limited-income groups and put it in the pockets of non-limited income groups? You want to convince me that the taxes that are paid by people are not distributed among top figures in the country? Also, tax breaks are very limited and therefore it is impossible for one to lead a decent life in their own country, Egypt. Why do we have to pay this tax that does not bring us any benefit? Those who are talking and those who made these laws don’t know what is it like for public servants to have one penny deducted from their salaries.

  • جيكا المصرى

    2013-6-10

    The Muslim Brotherhood leaders are collecting money from the taxpayers to spend them on their electronic committees. Those people know quite well that the Internet played an active role in the revolutions. They want to suggest that they represent a great proportion of the Egyptian population. For this reason, I call on them to demonstrate in the streets so that we can see their real number. Were they brave they would face the Egyptian people in the streets. In fact, they are hypocrites. They want to get their share of the stolen public fund. O Muslim Brotherhood, fear Allah. You should realize that the people do not respect you.

  • سعيد حساسين

    2013-6-4

    If these taxes are met with or done in return for services which respect the needs of citizens and seek their prosperity, then this is their right, because we pay these taxes with consent and conviction. But the state very soon issued new Tax Laws and in the meantime, it is crippled when it comes to issuing laws for providing a good, respectable livelihood and providing food, commodities and fuel. This is the robbery of people's money, without any legal or moral support.

  • شاهين أبو شالة

    2013-6-4

    The citizen should not even think about the basic demands "only" in return for these taxes which he pays. If he thinks about calling for more advanced services in the services that are globally known, he has to hit his head against the wall, because his simplest internationally known rights will not be achieved for two main reasons. The first one is: the members of some Arab governments are not in the habit of thinking innovatively, which elevates peoples to the international premium ranks. Secondly: a lot of youth in the Arab Spring countries, and in Egypt in particular, didn't understand that foreign sides interfered during the incidents of the revolution to incite the youth to protest permanently… continuation.

  • ماجد المحمدى

    2013-6-4

    This is an unsuccessful policy… this is absolute failure, looking for taxes to suck the blood of citizens… absolute failure, and over time, the failure appears clearer day by day… instead of giving to the people… he takes from them… some rob the country and others rob the people… from one disaster to another; don't be sad, my heart… Oh, dear Egypt, God be with you… there is no power except from God.

  • كارولين مجيد

    2013-6-4

    The successful tax policies in any country, even a back warded country like Egypt, mainly depends on encouraging and increasing productivity and income to find a tax pot that increases the tax income for the state, and also easing the tax burden on all the citizens and the productive institutions for those people whose incomes are less than the minimum degree for the tax exemption which is 12000 per year, and all the employees in the government, the private sector and in small and tiny projects are equal in that, then placing ascending tax policy incomes that starts from 10%...up to 30% so that the proceeds by the contribution of individuals are not more than 50% of the proceeds tax on business and public sectors and not vice versa like what is happening in the Egyptian Ministry of Finance. I hope they realize this.

  • جميلة العدان

    2013-6-4

    This law is balanced except from 3 things: the huge gap between the categories and the degree of exemption, it should’ve been at least 18000 in order to implement it, as I’m a government employee and it’ll be deducted from any amount I get without consideration to the exemption or the exempted amounts, as the income should be identified within the fiscal year and then deducting the exemption then dividing it by the year months.

  • احمد السقا

    2013-6-4

    That means that whoever is going to be subject to the minimum category in this income taxes and the middle income employees are included in the second and third category, and of course the rich people don’t care because they won’t be harmed, as they decreased them from 30% to 25%, may God be our savior and protector and punish all the ones who contributed and accepted this project. They don’t know how to get money so they decided to get it from the poor people.

  • باسم محمد

    2013-6-4

    For clarification, the 12000 pounds exemption regarding the salaries, whether in the government or the private sector, is constituted from 7000 pounds (it was 4000 before the amendment), and this amount concerns the salaries only + 5000 and this is a category exempted from taxes, whether we’re talking about salaries, or commercial or industrial or technical activities, then 5000 pounds are exempted and after that there’s a 10% to 25% deduction.

  • جمال طيف الله

    2013-6-4

    I hope that everyone would read the explanation of the tax to be deducted from the salary, with an exemption for the first 9000 pounds of income, and then comes the 12 thousand. The salaries from 5000 to 20000 will have 10% deducted, then after the amendment it became from 5 to 30 thousands, and this category groups a big number of middle class officials in the state. I hope that the explanation is clear to everybody, and I hope that the government and the president will exert more efforts in favor of the state and the employees with low income. Thank you.

  • مروه سلطان

    2013-6-4

    What did Morsi and Qandil do other than raise prices and taxes, increase customs and the prices of gasoline, electricity and water? In addition to chasing away investors and tourism and increasing the debts as well as the low exchange rate of the pound. What did they do but for the arrest of opponents and threatening the journalists and media professionals?

  • محمد الحربى

    2013-6-4

    Taxes were only paid by the poor in an era of the ousted in order to be stolen by the rich, but now they will pay them against their will, so they now tarnishing the application system in the pretext of the poor. What did they do when the fugitive Minister of Finance imposed a tax on real estate?

  • نور حمدى

    2013-6-2

    According to the Media spokesman for the campaign of “Rebellion” in Fayoum, 3 members of the Freedom and Justice Party in the Governorate signed the form of withdrawal of confidence to express their dissatisfaction with the performance of the regime, pointing out that they were photographed carrying the party membership cards while signing the forms. He also noted that the signatories included Ayman Sayed Ali and Imad Mahmoud Othman Moussa. The third signatory refused to give his name. The spokesman confirmed that there were a large number of the Islamic movement members in general who had signed the form of the campaign. The phenomenon was really surprising especially in the Governorate of Fayoum which is called “the Emirate of the Muslim Brotherhood”.

  • مريم رؤوف

    2013-6-2

    Perhaps, Morsi intends to make Egyptian people mere heavy taxpayers. I would tell him that he is mistaken. I must supplicate Allah Almighty to ask forgiveness for his “evil” intentions. Indeed, I am really skeptical about the real intentions of this guy. In fact, the poor taxpayers in Egypt would not tolerate any further rise in the taxes. The Egyptians demonstrated in streets after long years of silence to call for the ousting of Mubarak due to poverty and oppression. Thus, Morsi should not restore the Mubarak regime in terms of heavy taxation. He should bear in mind that we reject any tax rise. We thought that we got rid of the excessive taxations after the revolution and the toppling of the unjust regime of Mubarak. Unfortunately, it turned out that Mubarak was more flexible with the Egyptian people, namely the poor. Morsi proved to be even more oppressive. The lower classes could not afford for those skyrocketing taxes. During the rule of Mubarak’s regime, only those whose income equaled or exceeded twenty five thousand EGP were obliged to pay the taxes. However today, even those whose income does not exceed Five thousand EGP are supposed to pay heavy taxes. In so doing, the State budget could increase. However, the poor Egyptian people could afford for heavy taxes especially in the current economic crisis. Those rates are unrealistic at all. I thought that Morsi was much more intelligent than Mubarak. However, the fact that he ratified this Tax Act shows that he is not interested in the poor conditions of the Egyptian people. The latter are really suffering. They are so poor that they live in slums where they are deprived of such basic services as sanitation. The poor Egyptians are also deprived of adequate education and medical care. Surprisingly, the President is imposing heavy taxes on those people. This is really absurd. Those people could not afford for their living, let alone the heavy taxes. The Egyptians believe that the needs of the household should be put as a priority over the needs of the Mosques. Likewise, the needs of the household should come first. The State institutions are originally plagued by corruption, theft and looting. The people who are suffering to death must pay taxes for the State, only to offer a chance to the corrupt to steal them.

  • مراد علاء

    2013-6-2

    Regrettably, the guy we supported in the past elections on the understanding that he is the good one for the Egyptian people turned out to be a new dictator and even a Pharaoh. As a matter of fact, Mohamed Morsi did not keep his promise to the Egyptian people. He failed to improve the living standards of the paupers. He did not comfort the Egyptian people as he promised. On the contrary, he increased the hardship and the suffering of his people. Suffice it to say that he decided to raise the general tax. The decision was ratified by President Morsi. It is crystal clear that the Egyptian people will be deprived of enough food, clothing and luxury. Egyptians will be obliged to spend a great deal of their incomes on heavy taxes and other obligations. It seems that Dr. Mohamed Morsi is interested only in collecting taxes. The regime of Mubarak did the same during its rule. Likewise, Morsi does not care about the dire conditions of his people. Indeed, the national economy is going through a severe recession and the infrastructure is ruined. Meanwhile, Morsi is adding insult to injury. Indeed, Morsi was supposed to diversify the State resources rather than rely on the taxes imposed on the originally poor Egyptians. In the election campaign, Morsi promised to attract more investment and to boost the economy with more cash. It seems that they have been false promises. It was a mere dream which will never come true. The new Tax Act, for example, is not fair at all. Those whose income ranges from five thousand to thirty thousand Egyptian Pound are supposed to pay 10 percent. The ordinary people whose income hardly cover the expenses of the basic needs such as food, drinks, school fees and water and electricity bill requirement will suffer even more. I do not want to sound demanding but this is a fact. The Egyptian people are not asking for too much. They want enough income to lead a normal life. We are not greedy at all but the problem is really serious. Egyptians won’t tolerate such conditions for long.

  • على محمود على

    2013-5-31

    I did not like it.

  • محمود ذو الفقار

    2013-5-30

    I wonder why all this should happen to us and what these poor people have done especially that they want to lead an ordinary and decent life and nothing more. They are not asking for more than a living, a home, clean water and consciences. They want nothing but a decent life rather than the everyday price increase and promises without granting any kind of interest in poor citizens who have become diabetic and are suffering from high blood pressure.I wonder what remained. Should they live unsafely? It is a reality. Should they steal and kill in order to live? Is it a life or a jungle? What happened?

  • معوض إسماعيل

    2013-5-30

    We can start the reform through these laws which will ease the burden on the ordinary citizens and add some weight to the well-off. Since I am a specialist in the field of taxation, a legal accountant, I would like to say (may Allah bless the President). Indeed, you have shown that the competent advisers and ministers have made a lot of efforts hoping to introduce amendments to the Act of sales tax.

  • سماح نور

    2013-5-30

    In the past, we used to complain about the Minister of Finance, Youssef Boutros-Ghali, and to laugh at him since we were paying taxes on everything. After that came the late Government of Al-Janzouri who claimed from the beginning that he needed a loan from the IMF. As a result, the dissolved council of the Brotherhood objected and claimed that loans are religiously prohibited. Thus, I would like to ask them why they legitimize what Allah has forbidden. Allah is our only protector and Guardian.

  • احمد عز

    2013-5-30

    I am sure that the application of the conditions of the International Monetary Fund will complicate the situation in Egypt. The Egyptians are calm simply because they are preparing for a new revolt. Before and shortly after the revolution the Muslim Brotherhood promised the Egyptian to build castles in the air through the prosperity of the Renaissance. Surprisingly, the situation under the reign of the Brotherhood proved to be catastrophic. Today, there are more debts and the commodity prices have risen. We went through the crisis in the provision of such vital products as fuel, electricity and the lack of security. In short, the State institutions are on the verge of collapse. Meanwhile, Morsi and his clique are still happy with their high positions, to the detriment of the people. There will be a great disaster in this country which will end the rule of Morsi and the Brotherhood. Egypt will go through a period of instability and chaos. This is the “fruit” of the rule of the Muslim Brotherhood.

  • تيسير المنفلوطى

    2013-5-30

    In all countries the taxes are imposed on profit and the value-added. They impose higher taxes on carbon industries which are either harmful to health and pollutant. The tax usually depends on the cost of the product and the essential needs of the consumers. Hence, the tax imposed on a mixer differs from that of an iron, an electric fan, a refrigerator or a car air conditioner. In other words, the tax on accessories is much higher than the tax on basic consumer needs. The value-added in all countries are calculated depending on the importance of the sales, the bank or post interests and the margin of the sales price compared to the purchase price in the Stock Market. The taxes are also imposed on unearned income such as rented estate. The citizens also pay taxes on new suburb houses, advertisement, the value-added, cleaning services, security, car parking, construction licenses, public events, sports activities, wedding ceremonies, markets and many other public services. In fact, I had mentioned that in the article about the absence of detailed information about the taxes on oil products, the real estate and even the professionals' seals. Unfortunately, my words were ignored altogether. Egypt is plagued by schizophrenia, craze, insanity and excessive arrogance of the high officials. Those people think that they are brilliant experts. In fact, they are all liars.

  • محمد مرسى مواطن عادى

    2013-5-27

    I am with Dr. Mahmoud Sultan