Chi Salaries and other Like Payments Nature of the Salaries Tax ols,oll le ayypall aeub Nature of the salaries tax may be included the following: a) Income tax on natural persons oluall ste (2,35 b) The taxable income is based on Tax Law No. 91 of 2005 — ugild ste Iely C) Apply on four sources of income — Jl jslac go> le SVizol yudi sabi sources of income: 1- Salaries and the like obizoll au 2- Professional or non-commercial activities dy] upoll au yo 3- Commercial or industrial activities auclally abel awl ayo 4- Real estate a,lasll au all The Main Characteristics of Tax on Salaries - A Direct Tax and imposed on nature person’s income eubll pasa! gle (2,83 onble ayo no Olizall ayo - The source of income is resulting from work (Labor) doall yo aili [Sul piace yo Ugh ol uV - Imposed on Egyptian resident and non-Egyptian residents on income derived from Egypt all she p20 58 prio! uirdl ol Spaoll ale obi zoll ayo yodi pace ISI yo ale gard! pi Sil - Calculated annually and deducted monthly Sopa! Gill ye pass OSg Ugiw Gaurd - Consider family allowance and personal charges for any employee regardless the gender or the martial statues. aclie Yl Jbl gf Quid! Go sbi! pad wpa Ugooll pw trate olelaclaya gals! Js-ul Tax Base of Salaries Tax To compute the tax base of salaries tax, The following conditions should be followed: - Apply for all sources of income (4 sources, if any) - Apply unified tax system Sal Elgil grox ole 01590 au io - Apply tax rates for the taxable year ay all anol le lely puss - Compute the tax payable as follows: 15S Gud Tax payable = tax due — taxes paid during the yearTax Rates Slices on 2005: 2014 : - First L-E 5,000 Exempeted - Second L:E 15,000 10% - Third L-E 20,000 15% - Fourth L-E 40,000 20% @ L.E.5,000 for General Exemption (Free Slice) @ LE. 4,000 for personal Exemption (if Salaries Only) Tax Rates Slices on _ _2015 & 2016: - first slice : 0 to 6,500 Exempted - Second slice: more than 6,500 to 30,000 10% - Third slice: more than 30,000 to 45,000 15% - Fourth slice: more than 45,000 to 200,000 20% - Fifth slice: more than 200,000 22:5% © LE, 6,500 for General Exemption (Free $ @ LE. 7,000 for personal Exemption (if Salaries Only) Tax Rates Slices on__2017: First: 0 to 7,200 Exempted Second: more than 7,200 to 30,000 10% Third: more than 30,000 to 45,000 15% Forth: more than 45,000 to 200,000 20% Fifth: above 200,000 22.5% © LE. 7,200 for General Exemption (Free Slice) @ LE. 7,000 for personal Exemption (if Salaries Only) Tax Rates Slices on __2018 _& 2019 : First: oO to 8,000 Exempted Second: more than 8,000 to 30,000 10% Third: — more than 30,000 to 45,000 15% Forth: more than 45,000 to 200,000 20% Fifth: above 200,000 22.5% Using Tax Discount for 3 slices (for one time) on 2018: Second Slice: 85% Third Slice: 45% Fourth Slice: 7.5% @ L.E. 8,000 for General Exemption (Free Slice) @ LE. 7,000 for personal Exemption (if Salaries Only)The new tax rates from 2020 Income Up to Up to Up to Up to Up to More Tax rate 600,000 700,000 800,000 900,000 1,000,000 _| 1,000,000 0% 1 - 15,000 5% | 15,001 - 30,000 1 - 30,000 10% | 30,001 - 45,000 30,001 - 45,000 1 - 45,000 15% 45,001 - 60,000 45,001 - 60,000 | 45,001 - 60,000 1 - 60,000 20% | 60,001 - 200,000 | 60,001 - 200,000 | 60,001 - 200,000 | 60,001 - 200,000 1 - 200,000 22.5% | 200,001- 400,000 | 200,001- 400,000 | 200,001- 400,000 | 200,001- 400,000 | 200,001- 400,000 | 1-400,000 25% |More More More More More More 400,000 400,000 400,000 400,000 400,000 400,000 @ L.E. 15,000 for General Exemption (Free Slice) (for the first Category less than 600,000) @ LE. 9,000 for personal Exemption (if Salaries Only) Sarting from July.1, 2020Example 1: The following are the taxable revenues that earned by an individual taxpayer resident in Egypt for 2020: - L.E. 40,000 salaries - L.E. 60,000 profits from non-commercial profession - L.E. 80,000 Profits from commercial activity - L.E. 10,000 revenues of real estate wealth Additional data - The taxpayer pald during the year building tax of L.E. 500 - The total amount that deducted from the taxpayer for account of tax during the year L.E. 3,500 Required Compute the tax payable for the taxpayer for 2020Solution 1- The Tax Base Salaries Revenues of non-commercial profession Revenues of commercial activity Revenues of real estate wealth Total annual net income LE. 2- Tax Due for 2020 Slice Amount Rate. First 15,000 Free - Second 15,000 - 2.5% Third 15,000 10% Fourth 15,000 15% Fifth (remainder) 130,000 20% Total 120,000 L.E. 40,000 60,000 80,000 10,000. Tax Payable = Tax due - Taxes Paid during the year Tax Payable = 30,125 - (500+ 3,500) =L.E. 26,1257 Apply the New Amendments of 2020 on Salaries and the Like 2020 ain 59 GLiyoJl ayo le Goi sit] CLLasil - Applied by the Law No. 26 of 2020 - Apply the new tax rates for salaries starting from 1 July, 2020 2020 gals | 0 aulay Veil] 050 Saabs pi - For 2020, for only salaries, apply two tax rates for year 2020 489 2020 ai JMS aalixo ain, OVize piriat sill bad li;oIl ayo - Apply tax rates of 2018 from 1 January to 30 June, 2020 (with tax credits), based on Law No. 97 of 2018. (Cosupall pos! uurig )) 2018 Veo Gabi annul yo Jol Baill 9d - And apply tax rates of 2020 from 1 July to 31 December, 2020. (without tax credit) « JI puccsll Vo )) 2020 wNis20 Sebi anal Go sll alll 08 9 - In 2021 and subsequent years, apply the new tax rates of 2020 for all the year US aiuul gle 2020 oie Sibi 2020 ai rss Sg - Increasing the annual personal exemption from L.E. 7,000 to L.E. 9,000 - Reducing the tax burden - Increasing the general exemption (free slice) to L.E. 15,000 for only first slice (within L.E. 600,000) - The general exemption is granted regardless marital status euclosrVl Ubu! 5! yal oc sill Lae wupll Usooll pw audiuy clelacdAn employee works in private sector earned net income before-the personal exemption of L.E.3,000 monthly during 2020. The‘employee had no other income. Required Determine the income tax due for 2020 Solution - First: For the period from Jan, 1 to June 30, 2020 (Based on Law 97 of 2018) Annual net income 3,000-* 12. 36,000 Less: Personal exemption. a (7.000) Tax.base 29,600 First slice (free) 8,000 *free= 9 Second slice(remainder) 21.000 * 10% = 2,100 2 “200 (-) Tax credit :2;100 * 85%, (1.785) Tax due suse Tax due for the first 6 month 315 / 2 = L.E. 157:5* - Second: For the period from July 1 to December 31, 2020. (based on Law 26 of 2020) Annual net!income 36,000 Less: Personal exemption (9,000) Tax base 27.000: First slice (free) 15,000* free = 9, Second slice(remainder) 12:000* 2.5% = Total income ~ 27000 Tax-due 300 Tax due for the second 6 month 300 / 2. = L.E.150 Total Tax due for 2020 +150 = L.E,307.2021 ain Sly gsLuul Sliodl ues Example 2: An employee works in private sector earned net income before-the-- personal exemption of L.E.3,000 monthly during 2021. The employee had no other income. Required Detertnine the income tax due for 2024 Solution: Only based on Law No.26 of 2020 Annual net income ( 3,000 * 12) LE. 36,000 Less: Personal exemption 9.000) Tax base 27,000 First slice (free) 15,000* 0 = O Remainder 12,000 *2.5% = 300 Total LE. 27,000 300 The Tax due for 2021 = L.E. 300 The monthly tax due= 300 /12=L.E. 25packed: 10 An employee works in a private sector company earned net income before deducting the personal exemption of L.E. 20,000 monthly during. 2920, ‘The employee had no other income. — Required Determine the income tax due for 2020. Solution = First: For the period from January 1, to June 30, 2020 (Based-on'Law 97 of 2018) Annual net income (20,000 * 12) 240,000 Less: Personal exemption 7.000) Tax base 233,000 First Slice (free) 8,000 Second slice 22,000 * 10% = 2,200 Third slice 15,000 * 15% = . 2,250 Fourth slice 155,000 * 20% = 31,000 33.000+ 22.5% = 1.425 Total 233,000 42.875 Fifth slice (remainder) dsl a I fl Lop 6) est dns Tax due for first 6 month (42,875 /2) . =L.E. 2,437.5 Second: For the period from-July 1 to December 31, 2020 (based on Law 26'0f 2020) Annual net income 240,000 * Less: Personal exemption (2,000) Tax base 231,000 First stice (free) Second slice Third slice Fourth slice Fifth slice Sixth slice (remainder) Total 15,000 15000*2:5%= 375° 15,000 * 10% =" 1,500 15,000 * 15% =» 25250 140,000 * 20% =: 28,000 BAWO00'* 22:5%= 6,975" ‘Tax-due for second:6'month-(39,100;/2);= E.Es19}550"° Total tax due for 2020 = 21,437.5 + 19;550= I.E: 40,987.5.