The Egyptian Tax Authority (ETA) has issued guidance to clarify the determination of the individual income tax liability for 2020 in light of the introduction of new progressive individual income tax rates introduced by Law No. 26/2020 in May 2020 (previous coverage).
The guidance provides that with respect to employment income, the prior progressive rates apply for income earned from 1 January to 30 June 2020, with a personal deduction (exemption) of EGP 7,000. For employment income earned from 1 July to 31 December 2020, the new progressive rates apply, with a personal deduction of EGP 9,000. It is also provided that the prior discount tax credit mechanism for individual income tax only applies for income earned from 1 January to 30 June 2020.
To calculate the income tax due for 2020 employment income, the income for each 6-month period is converted into annual income, and the tax is calculated according to the respective progressive rates and personal deduction. The resulting amounts are then apportioned (50%) for each 6-month period and aggregated to determine the 2020 tax liability.
With respect to other non-employment income, including income from commercial, industrial, and professional activities, and income derived from real estate, it is confirmed that the new progressive rates apply for tax years ending after the date Law No. 26/2020 entered into force, which is 8 May 2020.
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