Income Tax Law amended, increases annual income tax exemption to LE36,000

The House of Representatives approved new amendments to the Income Tax Law no.91/2005 on Monday, with the goal of increasing the annual income tax exemption from LE 24,000 to LE 36,000.

Changes included implementing a 27.5% tax on individuals earning an annual income over LE 1.2 million, compared to the previous rate of 25 percent, explained Yasser Amr, the Deputy Chairman of the House of Representatives, to local news outlets yesterday.

The amendments are part of efforts to promote social justice by increasing the threshold for annual income tax exemption to LE 36,000. It also aims to introduce a higher income tax rate for individuals with substantial incomes.

The income tax imposed on individuals earning more than LE 1.2 million annually is expected to generate around LE 4 billion, said Mohamed Maait, Finance Minister, in a separate statement. This will cost the state treasury around LE 10 billion, with the net cost of these tax exemptions estimated at LE 6 billion.

The finance minister added that there will be further income tax exemptions in the coming fiscal year to support low and average-income groups, but also clarified that his ministry has no intention of increasing taxes on industrial and commercial profits.

The minister mentioned that the bill also introduces a simplified tax system for small and micro-scale enterprises whose annual transactions do not exceed LE 10 million.

Maait pointed out that it does include incentives and rewards for taxpayers such as a 5% incentive for those utilizing the new e-invoicing system, while those reporting tax evasion crimes will be rewarded with 10% of the recovered amount.

Ragab Mahrous, an advisor to the head of the Egyptian Tax Authority (ETA), told Asharq Business that the newly approved tax changes will take effect starting from July 1st.