President Abdel-Fattah El-Sisi issued a decree lowering the top tax rate on companies and individuals from 25 per cent to 22.5 per cent. The decree also suspended a 10 per cent capital gains tax for two years as of August 2015.
According to the decree the highest taxable income bracket was reduced from LE250,000 to LE22,000. Egypt’s economic ministers have agreed two days before the March Sharm al-Sheikh conference to cut the income tax ceiling to 22.5 per cent for individuals and corporations, from 30 per cent to stimulate investments.
Moreover, the decree comes to confirm the government decision May to the 10 per cent tax on capital gains on hold, reversing a central component of its economic reform agenda that investors had criticised. Back then it kept in place a 10 per cent tax on stock dividends.
Both taxes were approved by Sisi in July 2014 as part of efforts to overhaul the economy.
Also the ministry of finance announced that the tax exempted annual income for both private and public sector employees increased from LE12000 to LE13500 .
Meanwhile, Minister of Finance, Hani Kadri, expected the new Value Added Tax (VAT) law to be ratified within weeks as a means to increase State revenues.
The new tax, which is currently being discussed with representatives of the chambers of commerce, is expected to add LE30 billion in revenues during the current fiscal year. The tax revenues as a whole as projected by the 2015 / 2016 budget came at LE422.3 billion.
VAT would apply to all goods and services in Egypt, unlike the current sales tax which is imposed on only some services. It is also levied on all levels of production, unlike the sales tax, which is currently only collected at the retail level.
