Taxation in Egypt

Abstract

The taxaiion system in Egypt has undergone many changes over the past 50 years. It was only in the 1930s that all inhabitants of Egypt finally came under one taxaiion system, when the Capixlations were properly reformed md privileges for foreigners abolished. Until that e much to the disappointment of economac planners and social refoImers in E>pt, some foreign nationals were exempt from many taxes, pariicularly those on income and profits, although there had been a steady erosion of privilege since the First World War. Municipal taxes and licence fees had generally always been payable by foreigners, but it was in the scope of the salary taxes that most exempiions occurred. In 1937 howevera the Montreus Conveniion dealt with the remg civil and criminsl immunities of foreigners in Egypt) and up to and mcluding the Second World War the Egyptian state was able to collect tax regardless of the naeonality or religion of the tax payer. Developments after the Second World War reflected the social change in Egypt, especially the revoluiion of 1952, and the imposition of state socialism as a means to ensure radical chmge. Many of the taxes imposed after 1952 had poliiical as well as economic factors influencing their extent, and this method of financial control led to SigllifiCaIlt patterns of taxation policy. With the Open Door policy of President Sadat in the 1970s the taxaiion system had to change yet again, and it now reflects the growing middle-class professional stratum, as well as the re-emergence of an industrial sector in private control. There are several basic taxes that need to be considered. First of all, direct taxes levied on salaries provide the most impact on the population as a whole. There are also separate tax rates for professional services, and on trade and corporate income. Capital taxes, on agricitural land, property, and inheritance, provide further deductions from a person's gross wealth. In addiiion, there are indirect taxes such as starnp duty, customs duiies, purchase taxes and consumption taxes. Personal mcome tbough salaries and wages has a -free band of LE 960 for married couples with children, LE 720 for siIlgle persons, and LE 840 for marned couples without children. The table below illustrates the tax rates on remaining income.