INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. There is no joint taxation for married couples, but dependent children are taxed jointly with the household.

INCOME TAX

There are four recognized categories of income: employment income, business income (which includes income from commercial and industrial activities), non-commercial income, and income from real estate assets.

Taxable income is computed by deducting income-generating expenses and allowable deductions from the gross income. Income is aggregated from all sources and taxed at progressive rates.

Residents can deduct the following allowances from their employment income:

• Personal allowance of EGP4,000 (US$724)
• Social insurance contributions
• Life and health insurance premiums, plus contributions to private insurance funds; the aggregate of both contributions may not exceed 15% of the base salary or EGP3,000 (US$543)

RENTAL INCOME
Rental income derived by residents is taxed at the standard progressive rates. Taxable income is gross rent less income-generating expenses. The maximum deduction allowed to cover operating expenses is 50% of the gross rent.

CAPITAL GAINS
There is no capital gains tax in Egypt.

A flat rate of 2.5% of the gross proceeds is levied on sales of real estate or building sites, within the boundaries of Egyptian cities.

PROPERTY TAX

In addition to the real estate and supplementary (khafar) taxes, buildings and agricultural land may also be subject to taxes and duties imposed by the local authorities.

Real Estate Tax

Real estate tax is imposed on Egyptian real properties, payable by the owner. Whether the property is actually leased out or not, the tax is levied on the rental value of the property, which is assessed every 10 years for properties located within city boundaries and agricultural land. The tax base is the assessed gross rental value of the property less 20% to take into account maintenance and expenses.

Residential properties are taxed at progressive rates, from 20% to 40%. Non-residential properties are taxed at 10%. Agricultural land is taxed at a flat rate of 14%.

Residential properties constructed on or after 9 September 1977 and classified as non-luxurious properties are exempted from real estate tax. Real estate tax is deductible for income tax purposes.

Supplementary Tax

Supplementary tax (khafar tax) is imposed at the rate of 20% of the real estate tax payable. Buildings and agricultural land are subject to supplementary taxes (khafar tax).

Residential properties constructed on or after 9 September 1977 and classified as non-luxurious properties are also exempted from khafar tax. Khafar tax is deductible for income tax purposes.