Types of Taxes in Egypt

Taxes in Egypt are amounts imposed by the government on individuals and institutions to finance public projects and services provided by the government. The value of taxes in Egypt is determined by the relevant authorities, and the Egyptian Tax Authority enforces them based on specific percentage rates. In this article, we will explore the different types of taxes in Egypt in detail. Types of Taxes in Egypt Taxes in Egypt are divided into two main types: direct taxes and indirect taxes. 1. Direct Taxes Direct taxes are those taxes that the government imposes directly on individuals or companies, where the responsibility for paying them falls directly on the individuals or institutions concerned, and the burden of these taxes cannot be transferred to another person. Advantages of Direct Taxes: • The individual or institution responsible for paying the tax is the one directly subject to it. • The tax burden cannot be transferred to another person, making it a tax that is paid directly. Types of Direct Taxes in Egypt: 1. Income Tax: This tax is imposed by the government on individuals and companies based on the income or profits earned by a person or institution. The tax amount is determined based on the net income or annual profits after making the necessary adjustments according to tax laws. 2. Tax on Profits from Industrial and Commercial Activities: This tax is imposed on individuals or institutions engaged in commercial or industrial activities that generate profits. The tax is calculated as a percentage of the profits earned during the year. 3. Labor Income Tax: Under this type of tax, the employer is required to deduct a certain amount from the employee’s salary each month under the name “Labor Income Tax” and transfer it to the Tax Authority. The employer must pay this tax monthly within fifteen days from the date of salary payment. 4. Real Estate Transaction Tax: This tax is imposed on real estate transactions at a rate of 2.5% of the value of the real estate transaction, such as the sale or transfer of ownership of a property. This tax is paid once when the transaction is made, and it applies only to natural persons. 2. Indirect Taxes Indirect taxes are taxes that are not directly imposed on individuals or companies, but are collected through intermediaries such as product merchants or service providers. The final consumer pays these taxes when they purchase a good or service, as the tax is added to the price of the product or service. Advantages of Indirect Taxes: • These taxes are part of the price of the product or service that the final consumer pays. • The merchant or service provider is responsible for paying the tax to the government, not the consumer directly. • These taxes are an effective way to reduce tax evasion and stimulate economic growth, as they contribute to increasing government revenues. Types of Indirect Taxes in Egypt: 1. Value Added Tax (VAT): This tax is imposed on goods and services purchased by individuals. According to Egyptian laws, the VAT rate is 14%, and it is added to the price of goods and services at the time of purchase. 2. Customs Duty: The customs duty is imposed on goods and products imported into Egypt. The rate is determined based on the type and value of the product. This tax becomes part of the overall cost of the imported products when they enter the Egyptian market. 3. Sales Tax: This tax is paid by individuals when purchasing certain goods such as clothing, food products, and other goods. Sales tax is imposed only once on the product when it is sold, unlike VAT, which is added at each stage of production and distribution. Conclusion In the end, taxes play an important role in boosting the Egyptian economy by increasing public revenues, which the government uses to finance public projects and services, and achieving sustainable economic growth