Tax Accounting 11/15/2018 Dr. Amr Nazieh

11/15/2018 Dr. Amr Nazieh

Chapter 3: Tax on Salaries and the Like 11/15/2018 Dr. Amr Nazieh

Contents Introduction. Taxable Revenues. Tax Bracket determination. Tax Rates. Tax Exemption. Tax Calculations. Tax Collection. 11/15/2018 Dr. Amr Nazieh

(1) Introduction The tax is imposed on revenues from work for others and under their supervision and control. 11/15/2018 Dr. Amr Nazieh

(2) Taxable Revenues The tax applies to: (1) All earning due to the taxpayer resulting from his/her work with third parties: with or without contract, periodically or non-periodically, whatever the names forms or reasons of those earnings, and whether they are for works performed in Egypt or abroad and paid by a source in Egypt. 11/15/2018 Dr. Amr Nazieh

(2) Taxable Revenues All earnings include: (a) wages. (b) remunerations. (c) incentive. (d) commissions. (e) grants. (f) overtimes. (g) allowances. (h) shares and portions in profit. (i) The monetary privileges and allowance in-kind of all types. 11/15/2018 Dr. Amr Nazieh

(2) Taxable Revenues (2) Earnings due to the taxpayer from a foreign source for works performed in Egypt. (3) Salaries and remunerations of chairmen and members of the boards of directors in the public sector companies and the public business sector companies, who are not shareholders. 11/15/2018 Dr. Amr Nazieh

(2) Taxable Revenues (4) Salaries and remunerations of chairmen and members of the boards of directors in the associations of capital in return for their administrative work. 11/15/2018 Dr. Amr Nazieh

(2) Taxable Revenues Important notes: (1) Salaries revenues which are subjected to the tax should be paid by the Egyptian Public Treasury. (2) Payments by companies, establishments and individuals in term of revenues, with the exception of pensions, are subjected to tax in only two cases, namely: 11/15/2018 Dr. Amr Nazieh

(2) Taxable Revenues (a) If payment has been effected to person residing in Egypt for services rendered in Egypt or abroad. (b) If payment has been effected to person residing abroad for services rendered in Egypt. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Taxable revenues are divided into several categories, namely: (1) Salaries, wages and the like. (2) Bonuses (remuneration). (3) Cash and in kind benefits. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination First: Salaries, wages and the like. Salaries and wages represent receipts by employees and workers in return for performing work for others under their supervision. The reason behind the legislator having added the term ”and the like” is the desire that the context would be global so that no revenue evades tax. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Second: Bonuses (remuneration). Bonuses mean those amounts paid to workers and employees, in excess of salary or wage, in return for performing some additional work, which are considered as complementary to the original work. For example, the bonus for overtime working hours. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Note that: the end of service bonus is not considered a part of the taxable revenues. The tax will not imposed on the amounts received against the vocation spent on work. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Third: Cash and in kind benefits. (A) Cash benefits It is meant all that is acquired by the employee from his employer under work contract, whether these amounts have been disbursed periodically or occasionally, paid by the employer or third parties and whether they were mandatory or optional. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination To subject cash benefits to tax, they must have been granted to the employee as an advantage reflecting some personal benefit upon him, such as the full time devotion allowance paid to engineers and doctors. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination As for allowances paid to employees which are necessary for them to perform their work properly, or against actual expences, those are not subjected to tax. For example: Travel and transportation allowances, residence and boarding allowances, clothes allowances. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Example 1: An employee in a company acquires the following amounts: L.E. 700 overtime wages for working overtime hours. L.E. 300 travel and transportation allowances. L.E. 600 clothing allowance. L.E. 200 full time allowance. Required: Indicate the extent to which the above amounts are taxable. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Solution: (A) L.E. 700 overtime wages for working overtime hours. Subjected to tax on salaries and wages revenues (B) L.E. 300 travel and transportation allowances. Not subjected to tax on salaries and wages revenues (C) L.E. 600 clothing allowance. (D) L.E. 200 full time allowance. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Third: Cash and in kind benefits. (B) In kind benefits It is meant all that is provided by the entity or the firm to its employees in the form of free services, in addition to salaries. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Examples are: Housing Travel permits Meals Car use 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination For the in –kind benefits to be taxable, those benefits must be granted to the employee for free and the aim is to reward the employee in person. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination In-kind benefits are not subject to tax if the employer collects compensation for them from the employee or if the in-kind benefits are granted as a work necessity. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Example 2: A company provides an employee a lodging to live in, its monthly rental value amounts to L.E.200 against a monthly deduction of L.E. 3 from his salary. It also provides him a car for transportation which costs the company L.E.280 monthly free of charge. Required: Indicate the taxable in-kind benefits. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Solution (A) The lodging provided by the employer L.E. 200 Is not taxable: As this housing facility is not granted free of charge. (B) The cost of the car L.E. 280 Subject to tax: Because that stands as in-kind benefit granted to him free of charge. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Third: Cash and in kind benefits. The law has indicated some cases in which tax does not apply to some in-kind benefits, as follows: (1) Tax does not apply to the housing allowance (as a cash benefit) or to the house facility (as an in-kind benefit) for foreign experts as well as to Egyptians in the fields of rehabilitation and land reclamation. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination (2) Tax does not apply to the amounts received by representatives of the regional offices of the foreign companies and establishments in Egypt, for their activity in Egypt only. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Third: Cash and in kind benefits. The law has stipulated some estimations for the following in-kind benefits: (1) Company motor cars put at full personal disposal of the employee: The benefit shall be fixed at 20% of the amount of fuel, insurance, and periodic maintenance, whether the car is owned or rented. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Third: Cash and in kind benefits. (2) Call phones (Mobiles): The benefit shall be fixed at 20% of their costs throughout the whole year. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination (3) Loan and debts rendered by employer: Any loan rendered by the employer must exceed the salary of the employee through the last 6 months prior receiving the loan. And we have two cases: First: If the loan is without interest The benefit shall be considered 7%. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination (3) Loan and debts rendered by employer: Second: If the loan is less than 7% interest: The benefit shall be considered (7% - the loan interest). 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Example : One employer renders an employee a loan. Its value amount is: L.E 20,000 with interest 8%. L.E. 25,000 with no interest L.E 30,000 with interest 6% Suppose that what the employee gained during the last 6 months was L.E.24,000 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination Required: Indicate the taxable treatment. Solution (A) The loan does not exceed the 6 months salary (24,000): Therefore this loan not represents a benefit and then is not subjected to the tax. (B) The benefit = (25,000-24,000) × 7% = L.E.70 and this amount is subjected to the tax. (c) The benefit = (30,000-24,000) × (7%-6%) = L.E.60 and this amount is subjected to the tax 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination (4) Insurance policies on the life the employee, his family or properties: The benefit shall be valued on the basis of premium amount caused by the employer and paid during the year. 11/15/2018 Dr. Amr Nazieh

(3) Tax Bracket determination (5) Company shares granted at a value lower than the market price of the share: The value shall be determined on the basis of the difference between the market value of the share at the date of its acquisition and the amount invoiced to the employee. 11/15/2018 Dr. Amr Nazieh

Tax Rates The first slice: More than L.E. 6500 up to 30000: the rate 10%. The second slice: More than L.E. 30000 up to 45000: the rate 15%. The third slice: More than L.E. 45000 up to 2000000: the rate 2%. More than 2000000: the rate 22.5%. 11/15/2018 Dr. Amr Nazieh

Tax Rates Foreign experts are subjected to tax at the rate of 10% on the total amount they receive without any deduction for costs or family charges provided their employment duration does not exceed 183 days per year, continuous or interrupted. If exceeds that, they become taxable after deduction costs and family charges. 11/15/2018 Dr. Amr Nazieh

Tax Rates Similarly, the amounts received by employees from an entity other than their original work entity become taxable without any reduction for costs or family charges, differently from the amounts they acquire from their original place of work. 11/15/2018 Dr. Amr Nazieh

Tax Rates Example 3: An employee in a public sector company has an annual salary of L.E. 3000, has been seconded for a teaching position at the faculty of commerce, receiving a total bonus amounting to L.E.2500 other than his original salary from his original place of employment. Required: Indicate the taxable treatment. 11/15/2018 Dr. Amr Nazieh

Tax Rates Solution: (1) The annual salary L.E. 3000 will subject to salary tax after excluding the amounts which the legislator stipulated their exemption from tax (L.E.4000 for personal exemption, and L.E.5000 for family charges). (2) The secondment bonus will subject to salary tax without any deduction (as the amount received from an entity other than his original employment entity). Tax on secondment bonus = 2500 ×10%= L.E.250 11/15/2018 Dr. Amr Nazieh

Tax Exemption It is fixed amount L.E.7000 annually. (1) Personal exemption It is fixed amount L.E.7000 annually. (2) Workers’ share in the profit (3) Sums received by foreign diplomatic and consulate members and international organizations. 11/15/2018 Dr. Amr Nazieh

Tax Exemption (4) Social insurance subscriptions The employee’s contribution to social insurance on basic salary differ from those on variable salary as follows: (a) 14% of the basic salary plus the periodical raises and the special raise decreed, the maximum basic wages limit of subscriptions shall be L.E. 13440 annually (1120 monthly). (b) 11% of the overall elements of variable wage, with a maximum limit of L.E. 21900 annually (1825 monthly). 11/15/2018 Dr. Amr Nazieh

Tax Exemption The major type of the variable wages are: (1) Overtime wages. (2) Incentives. (3) Social insurance. (4) Distributed benefits quotas (5) Allowances except which are necessary for employee to meet actual expenses, such as: transportation, clothing or car allowances. (6) Special increments which are not added to basic wage. (7) Compensation for exceptional efforts. (8) Collective grants and bonuses. 11/15/2018 Dr. Amr Nazieh

Tax Exemption When calculating the social insurance contributions on variable wages, there are some notices: (1) Some allowances are not included in the variable wage (housing, clothing, car, secondment, transportation and meeting). (2) The social insurance subscription is calculated on the overall elements of the variable wage (with a maximum limit of L.E. 21900 annually). 11/15/2018 Dr. Amr Nazieh

Tax Exemption Example : One employee in one company gained the following amounts for January 2010: (1) L.E 850 basic salary (including L.E. 150 special raise). (2) Total variables wages = L.E. 500 Required: Calculating the amount of social insurance subscription. 11/15/2018 Dr. Amr Nazieh

Tax Exemption Solution: Monthly basic salary = L.E. 850 Maximum limit = 13440/12 = L.E. 1120 (1) The monthly social insurance subscription for the basic salary = 800 ×14% = L.E. 112 11/15/2018 Dr. Amr Nazieh

Tax Exemption Variables wages = 600 Maximum limit = 21900/12 = L.E. 1825 (2) The monthly social insurance subscription for the variable salary = 500 ×11% = L.E. 55 Total deductions = 112+ 55 = L.E. 167 11/15/2018 Dr. Amr Nazieh

Tax Exemption (5) Special insurance funds subscription by the employees. (6) Life insurance premiums The insurance should cover the life of the employee in his own favour or in favour of his wife or minor children. 11/15/2018 Dr. Amr Nazieh

Tax Exemption According to items (5 and 6) above, There are two conditions which must be fulfilled in order to exempt them from being subjected to tax, namely: (1) The total exemption accorded to the taxpayer shall not exceed 15% of the net income or L.E.10000, whichever is more (2) They should not have been previously deducted from any other revenues apart from the salaries revenues or the like. 11/15/2018 Dr. Amr Nazieh

Tax Exemption Example: One taxpayer subscribes with private insurance company for his life. Required: Determine the exempted amount in these cases: (1) The taxpayer paid L.E. 2500 and the 15% of net income is L.E.8000 (2) The taxpayer paid L.E. 13500 and the 15% of net income is L.E.10000 11/15/2018 Dr. Amr Nazieh

Tax Exemption (3) The taxpayer paid L.E. 15000 and the 15% of net income is L.E.12000 Solution: 11/15/2018 Dr. Amr Nazieh

Tax Exemption (1) Actual paid 2500 Compared with Then choose the less (2500) and this is exempted amount 2500 Compared with 15% (8000) Fixed amount (10000) The largest 11/15/2018 Dr. Amr Nazieh

Tax Exemption (2) Actual paid 13500 Compared with Then choose the less (10000) and this is exempted amount 13500 Compared with 15% (10000) Fixed amount (10000) The largest 11/15/2018 Dr. Amr Nazieh

Tax Exemption (3) Actual paid 15000 Compared with Then choose the less (12000) and this is exempted amount 15000 Compared with 15% (12000) Fixed amount (10000) The largest 11/15/2018 Dr. Amr Nazieh

Tax Exemption (7) Collective fringe benefits The following collective fringe benefits are exempted from the tax: (1) Free meal (2) Collective transportation of workers. (3) Health or medical care. (4) Tools and uniforms necessary for performing the work. (5) Tenements provided by the employer to the workers for performing their work owned by him or rented and are necessary for the nature of the work. (Any sums to meet actual expenses and related to perform of work) 11/15/2018 Dr. Amr Nazieh

Tax Exemption All the previous items are exempted by the Egyptian tax law (91 for 2005). There are other exempted items by Especial laws: (1) Special increment. (2) Social increment. (3) Some allowances: such as: (a) Representative allowances. (b) Universities allowances. 11/15/2018 Dr. Amr Nazieh

Tax Calculation In order to calculate the tax on salaries and settle it, the following three steps should be adopted: First: Calculation of the social security subscription and saving contribution. 14% of the basic wage plus the periodical increment and the special raise decreed on with a maximum limit L.E.13440 annually (L.E. 1120 monthly). 11% of the overall elements of the variable wage with a maximum limit of L.E.21900 Annually (L.E. 1825 monthly). 11/15/2018 Dr. Amr Nazieh

Tax Calculation Second: Calculation of the annual tax bracket. This can be done based on the following steps: (1) The basic wage plus the periodical raise ×× (the special raise (increment) exempted). (2) The variable wage subjected to taxation ×× The total basic and variable wage (1+2) ×× (3) Excluding the deduction (××) (4) Deduct personal exemption (7000) The net revenues ×× 11/15/2018 Dr. Amr Nazieh

Tax Calculation Notice: (5) Deduct the tax-payer’s life insurance premiums (××) (6) Deduct the family charges (6500) The net taxable revenue (the bracket) ×× Notice: If the employee receives a bonus, a grant, or profit, then the tax is to be recalculated after addition of those amounts. 11/15/2018 Dr. Amr Nazieh

(tax bracket × the tax rate)÷12 Tax Calculation Third: Calculation of the monthly tax due. The monthly tax = (tax bracket × the tax rate)÷12 11/15/2018 Dr. Amr Nazieh

Tax Calculation Example: Mohamed is an employee in a governmental unit, gets the following during 2008: L.E.2000 per month as basic salary (of which L.E.100 special increment). Total variables wages L.E. 500. L.E. 10 as a social increment. L.E. 50 as transport allowance (related to work). L.E.60 as special increment not added to the basic salary. 11/15/2018 Dr. Amr Nazieh

Tax Calculation L.E.600 as representation allowance. He pays insurance premium of L.E.20 per month on his life in favor of his wife and his minor sons. Required: Compute the due tax per month. 11/15/2018 Dr. Amr Nazieh

Tax Calculation Solution: First: Calculation of social insurance: On basic salary (a) 14% × 1125 4420.5 On variable wages: (b) 11% × 500 55 4476 11/15/2018 Dr. Amr Nazieh

Tax Calculation Second: Calculation of the annual tax bracket L.E. L.E. (1) The basic wage (2000×12) 24000 (2) The variables wages (500 ×12) 6000 Total annual revenues 30000 11/15/2018 Dr. Amr Nazieh

Tax Calculation Allowable deductions: (1) Sums exempted by special laws: L.E. L.E. Social increment (10 ×12) 120 Special increment (160×12) 1920 Representation allowance (600 ×12) 7200 (2) Sums to meet actual expenses and related to perform of work: Transportation allowance (50×12) 600 (3) Personal exemption 7000 (4) Social insurance contribution 4476 (21316) 11/15/2018 Dr. Amr Nazieh

Tax Calculation L.E. L.E. Net revenue 8684 (5) Deduct life insurance premiums: 1724 ×15% =1302 Fixed sum = 10000 Actual pay (20×12) = 240 (240) (6) Deduct family charge (6500) The net taxable revenue (tax bracket) 1944 11/15/2018 Dr. Amr Nazieh

Tax Calculation Third: Calculation of the tax due: Per year = 1944× 10% = L.E. 194.4 Per month = 194.4÷ 12 = L.E.16.2 11/15/2018 Dr. Amr Nazieh

Tax Calculation Example: Ahmed is an employee in a private sector company, gets the following during 2009: L.E.700 per month as basic salary (of which L.E.150 special increment). L.E.400 representation allowance. L.E.300 per month as a work nature allowance. L.E. 10 as a social increment. L.E.300 as special increment not added to the basic salary. 11/15/2018 Dr. Amr Nazieh

Tax Calculation L.E.1500 as an encouragement reward on August 2009. He pays insurance premium of L.E.450 per month for life insurance policy. He pays subscription for special insurance funds amount L.E.50 per month. Required: Compute the due tax for August 2009. 11/15/2018 Dr. Amr Nazieh

Tax Calculation Solution: First: Calculation of social insurance: On basic salary (a) 14% × 700 98 On variable wages: Work nature allowance 300 Representation allowance 400 Social increment 10 Social increment not added 300 Total variable wages 1010 (b) 11% × 500(maximum variable wage) 55 153 11/15/2018 Dr. Amr Nazieh

Tax Calculation Second: Calculation of the annual tax bracket L.E. L.E. (1) The basic wage (700×12) 8400 (2) The variable wage: Representation allowance (400×12) 4800 Work nature allowance (300×12) 3600 Social increment (10×12) 120 Special increment not added( 300×12) 3600 Total variable wage 12120 Total annual revenues 20520 11/15/2018 Dr. Amr Nazieh

Tax Calculation Allowable deductions: (1) Sums exempted by special laws: L.E. L.E. Social increment 120 Special increment (450×12) 5400 Representation allowance 4800 (2) Sums to meet actual expenses ------ (3) Personal exemption 4000 (4) Social insurance contribution (153×12) 1836 (16156) Net revenue 4364 11/15/2018 Dr. Amr Nazieh

Tax Calculation L.E. L.E. (5) Deduct life insurance premiums: 4364 ×15% =654.6 Fixed sum = 3000 Actual pay (500×12) = 6000 (3000) (6) Deduct family charge (5000) The net taxable revenue (tax bracket) (3636) 11/15/2018 Dr. Amr Nazieh

Tax Calculation Third: Calculation of the tax due: No Tax Fourth: Calculation the tax due on the reward: 1500 × 10% = L.E. 150 11/15/2018 Dr. Amr Nazieh

Tax Calculation Example: Youssef is an employee in a private sector company, gets the following during 2010: L.E.800 per month as basic salary (of which L.E.300 special increment). L.E.500 per month as an overtime wage. L.E. 10 as a social increment. L.E.100 as special increment not added to the basic salary. 11/15/2018 Dr. Amr Nazieh

Tax Calculation On first of July 2010, he got a periodical raise of L.E.100. At the end of the year, he received an incentive bonus amounting to L.E.1200. He pays insurance premium of L.E.80 per month on his life in favor of his wife. Required: Compute the monthly tax due for 2010. Compute the tax due on the incentive bonus. 11/15/2018 Dr. Amr Nazieh

Tax Calculation Solution: (1) Compute the monthly tax due for 2010 The first period (January –end of June) First: Calculation of social insurance: On basic salary (a) 14% × 700 98 On variable wages: Special increment 100 Social increment 10 11/15/2018 Dr. Amr Nazieh

Tax Calculation (b) 11% × 500(maximum variable wage) 55 153 Overtime wage 500 Total variable wages 610 (b) 11% × 500(maximum variable wage) 55 153 11/15/2018 Dr. Amr Nazieh

Tax Calculation Second: Calculation of the annual tax bracket L.E. L.E. (1) The basic wage (800×12) 9600 (2) The variable wage: Special increment ( 100×12) 1200 Social increment (10×12) 120 Overtime wage (500×12) 6000 Total variable wage 7320 Total annual revenues 16920 11/15/2018 Dr. Amr Nazieh

Tax Calculation Allowable deductions: (1) Sums exempted by special laws: L.E. L.E. Social increment 120 Special increment (400×12) 4800 (2) Sums to meet actual expenses ------ (3) Personal exemption 4000 (4) Social insurance contribution (153×12) 1836 (10756) Net revenue 6164 11/15/2018 Dr. Amr Nazieh

Tax Calculation L.E. L.E. (5) Deduct life insurance premiums: 6164 ×15% =924 Fixed sum = 3000 Actual pay (80×12) = 960 (960) (6) Deduct family charge (5000) The net taxable revenue (tax bracket) 204 11/15/2018 Dr. Amr Nazieh

Tax Calculation Per year = 204 × 10% = L.E. 20.4 Third: Calculation of the tax due: Per year = 204 × 10% = L.E. 20.4 Per month = 20.4÷ 12 = L.E.1.7 This tax is payable for each of the months from January till end of June. 11/15/2018 Dr. Amr Nazieh

Tax Calculation The Second period (July –December) First: Calculation of social insurance: The same L.E. 153 Second: Calculation of the annual tax bracket L.E. L.E. (1) The basic wage {900(800+100)×12} 10800 (2) The variable wage 7320 Total annual revenues 18120 11/15/2018 Dr. Amr Nazieh

Tax Calculation Allowable deductions: (1) Sums exempted by special laws: L.E. L.E. Social increment 120 Special increment (400×12) 4800 (2) Sums to meet actual expenses ------ (3) Personal exemption 4000 (4) Social insurance contribution (153×12) 1836 (10756) Net revenue 7364 11/15/2018 Dr. Amr Nazieh

Tax Calculation L.E. L.E. (5) Deduct life insurance premiums: 7364 ×15% =1105 Fixed sum = 3000 Actual pay (80×12) = 960 (960) (6) Deduct family charge (5000) The net taxable revenue (tax bracket) 1404 11/15/2018 Dr. Amr Nazieh

Tax Calculation Third: Calculation of the tax due: Per year = 1404 × 10% = L.E. 140.4 Per month = 140.4÷ 12 = L.E.11.7 This tax is payable for each of the months from July till December. (2) : Calculation the tax due on the incentive bonus: 1200 × 10% = L.E. 120 11/15/2018 Dr. Amr Nazieh

Tax Calculation Lump Tax Tax applies at the rate of 10% without any reduction to meet any costs against the following revenues: (1) Amounts received by persons residing in Egypt from other than their original work (the place from which the employee gets his basic salary). Example: An employee was delegated to share in faculty of Commerce examinations of May 2007. His remuneration amounts to L.E.900. Required: Calculate the tax due on the amount received. 11/15/2018 Dr. Amr Nazieh

Foreign experts are subjected to tax at the rate of 10% on the total amount they receive without any deduction for costs or family charges provided their employment duration does not exceed 183 days per year, continuous or interrupted. 11/15/2018 Dr. Amr Nazieh

Tax Calculation Lump Tax Solution: Tax due on his remuneration shall be: 900 × 10% = L.E.90 (2) Amounts received by foreign expert who residing in Egypt for a period less than 183 days continuous or interrupted. Example: A company of the Egyptian public sector concluded an agreement with a foreign expert to work in Egypt during the year of 2008. The terms of his employment includes the following: 11/15/2018 Dr. Amr Nazieh

Tax Calculation Contract period is 3 months. He shall receive in Egypt an amount of L.E. 20000 per 3 month. The company will pay the costs of his residence in one of the Egyptian hotels for an amount of L.E.2000 per month. Required: Calculate the tax amount due. Solution: Since the period of the foreign expert employment in Egypt not exceeds 183 days, therefore the foreign expert is considered not resident in Egypt. The tax due = 22000 × 10% = L.E.2200 11/15/2018 Dr. Amr Nazieh

Tax Calculation Lump Tax Example: A company of the Egyptian private sector concluded an agreement with a foreign expert to work in Egypt during the year 2009. The terms of his employment includes the following: Contract period is 7 months. He will receive an amount of L.E.10000 per month in Egypt. An amount of $ 2000 per month will be transferred to his account abroad. The company will meet costs of his residence in one of the Egyptian hotels against an amount of L.E.3000 per month. It was needed to perform the job. 11/15/2018 Dr. Amr Nazieh

Tax Calculation Lump Tax Required: Calculate the tax due. Solution: Since, the period of the foreign expert employment in Egypt exceeds 183 days, therefore, he considered resident in Egypt. The tax due is calculated as follows: 11/15/2018 Dr. Amr Nazieh

Tax Calculation Sums paid in Egypt (10000×7) 70000 L.E. L.E. Sums paid in Egypt (10000×7) 70000 Sums transferred abroad ($2000×7×L.E.6) 84000 Total 154000 Deduction from it Personal exemption (4000×(7/12)) (2331) Annual Tax base 151669 11/15/2018 Dr. Amr Nazieh

Tax Calculation First 5000 exempted 15000 ×10% = 1500 Calculation of tax: First 5000 exempted 15000 ×10% = 1500 20000 ×15% = 30000 101660 ×20% = 22332 Tax due 26832 In kind benefit is exempted. 11/15/2018 Dr. Amr Nazieh