Monetary Unit: Egyptian Pound (EGP)
Population: (2022 est.) 104,239,000
Official languages: Arabic
Egypt, officially known as the Arab Republic of Egypt, is a country in the Middle East. Cairo is the capital and the largest city of Egypt. The main sectors and contributors of economic growth are tourism, natural gas, media and agriculture. Its main trading partners are the United States, Saudi Arabia, China, Turkey and Germany
The public holidays in Egypt are as follows;
Jan 7 Orthodox Christmas Day
Jan 25 Revolution Day
Jan 25 National Police Day
April 25 Sinai Liberation Day
May 1 Labor Day
June 30 Uprising in Egypt
July 23 Revolution Day
Islamic New Year
Oct 6 Armed Forces Day
Employees in Egypt are typically hired with an initial probationary period. The length of the probation period is fixed by contract and, by law, cannot exceed three months.
According to the Labor Law in Egypt, the duration of the employees’ annual leave is 21 days per year provided they have worked one year for the employer. For employees who have worked for more than 10 years, serving at least one or more employers, the annual leave is 30 days.
In principle, female workers are entitled to 90 days of paid maternity leave. The condition for this is that she must work at her current position for at least 10 months. Women are typically only permitted to take maternity leave twice every five years under their contracts.
No provision for paternity leave under the Labour Law.
An employee who has a history of illness is entitled to paid sick leave at a rate of 75% of the wage used to calculate social insurance payments for the first 90 days, increasing to 85% for the subsequent 90 days. Up to 180 days of sick leave are compensated.
With regards to terminations for economic reasons, the severance allowance must be equal to one month’s wage for each of the first five years of service, and one-and-a-half months for each additional year. If an employer terminates an indefinite-term employment contract without good reason, they are responsible for paying the employee’s compensation, which must include at least two months’ worth of wages for every year of service as well as other benefits like earned leave and bonuses.
13th / 14th Month Pay: While a few employers pay bonus, there is no requirement backed by law to pay the 13th or the 14th month salary.
According to Egyptian labour legislation, a visitor from another country needs to obtain a work permit if they intend to work full-time in Egypt. The Ministry of Manpower and Immigration issues work permits to expatriates on a case-by-case basis. One year’s worth of work authorization is provided. The work permit may be renewed annually up to a maximum of five years unless exceptional approval is received from the Ministry of Manpower and Immigration. The renewal of the work permit usually takes from 10 to 15 working days, depending on the employee’s nationality. The following criteria are considered for applicants who will work on full-time basis:
- For purposes of applying for enrolment, the applicant must have a legal organization in Egypt.
- The position of the applicant should benefit the Egyptian legal entity (that is, he or she should be an expert in his or her area of specification, because ordinary positions, such as administrative positions, are not acceptable for enrolment).
- The candidate must possess a minimum of three years of relevant experience in the role that they would fill with the Egyptian legal entity.
- The legal entity in Egypt must adhere to the 9:1 labour ratio (that is, nine Egyptian full-time employed and socially insured employees for each expatriate employee).
Residence Visas: Foreign nationals who are married to Egyptians or who were born in Egypt or Palestine are granted standard visas for a term of five years. Foreign nationals are given special visas for political reasons or if they have helped Egypt in any way. This visa has a 10-year validity period and is extendable for additional 10-year periods.
In case of termination of a definite period employment contract by the employer at any time within its term, without a justified cause, the employer shall be liable to cover full wage which the employee would have been entitled to throughout the entire period of the contract. . The notice term that applies will be specified in the employment contract for a set length of time. If an employee has worked for the company for fewer than ten years, a two-month notice time must be given; if more than ten years have passed since the employee started working for the employer, a three-month notice period must be given. Employer is not entitled to terminate employment contract unless employee breaches the contract by committing a “grave fault” (Article 69, Labor Law).
“Grave fault” constitutes the following:
- Assumption of false identity or submission of forged documents;
- Continuous violation of safety instructions;
- Absence from work for more than 20 non-consecutive or 10 consecutive days in a given one year;
- Disclosure of the employer’s secrets causing material loss;
- Competition with the employer in the same line of work;
- Intoxicated state during working hours;
- Assault of the employer, general manager or any of the superiors;
- Professional incompetence
An employee may be entitled to compensation if they were dismissed unfairly. The amount of this compensation is determined by the appropriate court, but it cannot be less than two months’ worth of pay for each year of service, or, in the case of a fixed-term contract, the remaining salary due under the terms of the agreement.
According to the legislation, these benefits are required. These consist of the probationary term, yearly leave, federal holidays, sick leave, maternity leave, overtime pay, notice period, and severance compensation. Social Security payouts are statutory benefits as well.
In Egypt, a full work week is typically five 8-hour days, from Sunday through Thursday (to a maximum of six full days, which would generally add Saturday as the sixth).
Article 85 of the Labor Law stipulates that working overtime must be with the explicit agreement of the employer while the total working hours during a day must not exceed 10 hours. Typically, this indicates that the worker is only eligible for two hours of extra compensation. For overtime work done during the day, the minimum premium is set at 35% of the regular salary; for work done at night, it is fixed at 70%; and for work done on weekends and holidays, it is set at 100%.
If an employee has worked for the employer for fewer than ten years, two months’ notice must be given. If an employee has worked for the employer for more than ten years, a three-month notice period is required.
Income tax in Egypt is imposed on the following sources of income:
- Worldwide income from employment or dependent services paid by the Egyptian government or any Egyptian public organization, regardless of the employee’s residence, the place where services are rendered or the place of payment
- Egyptian-source income paid by Egyptian or foreign companies or by private sector enterprises to any employee resident in Egypt or resident abroad, in return for services rendered in Egypt (pension payments are excluded)
- Non-Egyptian-source income paid to a resident employee or individual if Egypt is the location of the headquarters of the individual’s commercial, industrial or professional activity
- Under the law, persons are deemed to be residents of the country where they have a permanent domicile. A person who resides in Egypt for a period exceeding 183 days during a calendar year is deemed to be resident in Egypt for tax purposes.
- Non-resident individuals and expatriate experts (as defined) are generally taxed on Egyptian-source income only.
Earned income (EGP) Tax rate on bracket (%) Tax credit
From 0 to 8,000 0 N/A
8,000 to 30,000 10 85%
30,000 to 45,000 15 45%
45,000 to 200,000 20 7.5%
More than 200,000 22.5 No tax credit
Only Egyptian citizens who work full-time are required to pay social insurance contributions. Employees pay 14% of their base income up to EGP1,670 per month and 11% of all extra payments, such as overtime or representation allowances, up to EGP4,040 per month. The two components of basic income and variable salary constitute the basis for the monthly social security contributions in Egypt. The amounts paid to the concerned social insurance offices should be in accordance with the following:
Employee Basic Variable
Salary maximum EGP 1,670 EGP 4,040
Maximum contribution EGP 211 EGP 444
Rate 14% 11%
There is no payroll tax other than the employer’s social security contributions. The amounts paid to the concerned social insurance offices should be in accordance with the following:
Employee Basic Variable
Salary maximum EGP 1,510 EGP 4,040
Maximum contribution EGP 393 EGP 970
Rate 26% 24%
In addition to the aforementioned, any managers or board of directors whose names are listed in the company’s commercial registry will be socially insured as employers and be liable for social insurance at a flat rate of 15% of the total maximum basic and variable pay criteria above (i.e. EGP 5,550).
Social insurance contributions and other payments made in accordance with the Egyptian Social Insurance Law, or any alternative systems formed in accordance with Law No. 64 of 1980 on alternative private social insurance systems are deductible. The contributions made by employees to the private insurance funds formed in accordance with the guidelines of the law on private insurance funds, published by Law No. 54 for the year 1975, are tax deductible.
The total deductible for employee contributions to private insurance funds, life and health insurance premiums, and insurance premiums for pension eligibility cannot exceed 15% of net income or EGP 10,000, whichever is less. Any additional industrial, commercial, or non-commercial, or real estate income should not be used to offset the same payments and premiums.
From September 1, 2013, each resident person (employee) was and is still entitled to a personal allowance of EGP 7,000 from their annual taxable earnings (previously EGP 4,000). Additionally, the first EGP 6,500 in the lowest tax band is tax-free for all residents and is subject to the 0% tax rule.
All expenses shall be deducted under the following conditions:
They must be related to the establishment’s commercial or industrial activity and required for engaging in that activity.
They must be accurate and backed up by documentation, with the exception of expenditures and expenses that aren’t often proved by paperwork.
The standard tax rate in Egypt is 10%
Dividends: Dividends paid to a resident or a non-resident entity are subject to a 10% withholding tax. The rate is reduced to 5% where the corporate recipient holds more than 25% of the capital or voting rights in the payer company for at least 2 years. The rate is further reduced under tax treaties
Interest: Interest paid to a non-resident is subject to a 20% withholding tax, unless the rate is reduced under an applicable tax treaty. Tax on interest is withheld at source at the domestic rate and the recipient must apply for a refund to benefit from a reduced withholding tax rate
Royalties: Royalty payments made to a non-resident are subject to a 20% withholding tax, unless the rate is reduced under an applicable tax treaty. Tax on royalties is withheld at source at the domestic rate and the recipient must apply for a refund to benefit from a reduced rate under a treaty
Technical Service Fees: Outbound payments for “services” trigger, in principle a 20% withholding tax unless otherwise provided in an applicable tax treaty