Parliament raises income tax exemption limit

Egypt’s Parliament unanimously approved a proposal to raise the income tax exemption limit from LE13,500 to LE24,000 submitted by MP and businessman Mohamed al-Sewedy.

Minister of Legal Affairs Magdy al-Agaty considered the Parliament decision a “request” that the government would look into, according to Reuters-affiliate Aswat Masriya, to which house speaker Ali Abdel Aal responded by saying that this is a Parliament decision and the government is obligated to put it into effect.

“This increase is very little. LE24,000 annually means a monthly income of LE2,000,” Heba al-Laithy, consultant for the state’s official statistics agency CAPMAS, told Mada Masr. “Tax exemption limits should rise by at least the increase in the inflation rate.

Annual inflation hit 24.3 percent in December — its second highest level in 25 years — reflecting the repercussions of recent government austerity measures, including the introduction of the value added tax, the slashing of fuel subsidies and the liberalization of the currency exchange rate, which prompted the Egyptian pound to lose more than 100 percent of its value.

These measures resulted in a major loss in purchasing power and shrink in real incomes. As a result, Leithy, told the privately owned Al-Shorouk newspaper in December that she expects poverty rates to rise from around 27.8 percent in 2015 to 35 percent. These estimates were based on assumptions of a 15 percent inflation rate, which is lower than that witnessed in December.

If the government wants to raises its tax revenues, they can reintroduce the capital gains tax or adopt a more progressive tax scheme, Laithy told Mada Masr.

The government suspended a 10 percent capital gains tax on May 2015 for two years, which was later extended for three more years by the Supreme Investment Council, chaired by President Abdel Fattah al-Sisi, in November.

Egypt’s income tax policy imposes a 10 percent tax on those earning up to LE30,000 annually, a 15 percent tax on those earning LE30,000 to LE45,000, a 20 percent tax on those earning LE45,000 to LE200,000 and 22.5 percent for those earning more than LE200,000.

The Parliament decision has not been made into law yet, and obligates the government to issue amendments to the income tax law and resend them to the house, reported privately owned daily Al-Masry Al-Youm.


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