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Income tax brackets adjustment and the best way to calculate them in Egypt 2022

"Taxes… For Your Good" is one of the terms that has always been associated with financial advertising campaigns. The term describes the income tax brackets and the return from paying and deducting these percentages from our wages.

But over time, and with the Income-tax brackets adjustment, it has become challenging to know what tax is assigned to each wage class, in addition to some misconceptions about the income tax brackets. 

This article explains the payroll tax brackets, tax deduction law, and how income tax is calculated with illustrative examples. 

What is income tax?

It is one of the national income sources, which are imposed at different rates on the categories of the people according to their level of revenue annually.

This tax is levied on individuals who work in government entities or business professions and companies that generate annual revenue. Where a yearly declaration is submitted to the tax authority stating the payment of all tax obligations; To prevent legal accountability. 

شرائح ضريبة الدخل في مصر Income tax brackets
Income tax brackets

The importance of income tax brackets

Recently, many adjustments appeared to the salary tax brackets, as a new bracket was included in the tax deduction group; To address the distortions and societal problems that led to a breach of tax justice among the different classes of society.

The primary purpose of the income tax brackets adjustments in Egypt was to achieve parity between the poor and the rich so that the poor citizen does not feel he is paying a tax more than what the wealthy classes pay.

That is why the government started adjusting to establish tax justice, improve the salary tax brackets, and provide a significant tax interest for the lower, middle and upper middle income groups. 

Income tax bracket adjustments

The salary tax adjustments included increasing the tax exemption limit to 60%.

New tax brackets have been made available for people with low and medium incomes whose net income ranges between 15 and 30 thousand pounds annually.

In addition to reducing the tax payment limit for those whose net income ranges between 30 and 45 thousand pounds to only 15% to 10%, and so on.

The increase in the tax exemption limit was represented in the adjustments to the income tax law from 8,000 pounds to 15,000 pounds, in addition to increasing the personal exemption limit from 7,000 pounds to 9,000 pounds. 

Income tax brackets

income tax brackets 2022

Now, let’s explore the income tax brackets for this year after the new adjustments and procedures that have taken place for the different tax categories. The income tax brackets for 2022 are:

Income tax brackets

How to calculate income tax for citizens

Many people cannot calculate income tax, especially those who do not prefer mathematics at different educational levels.

So, it will be difficult for them to know the annual amount due in taxes from their salaries.

We’ll learn how to convert percentages in income tax into an actual value with some illustrative examples.

Let’s first go over how the percentage is calculated, so we can see how to calculate the actual value of the income tax brackets. The percentage is calculated through a specific law based on the following:

Percentage = (value / total value) X 100. For example, if you want to know the percentage of 15 outstanding students in a class with a total number of 50 students, we divide 15 “the value” by 50 “the total value” and then multiply the result by 100 to be as follows: (15 / 50) X 100 = 30%.

Let’s apply the previous example to some of the income tax brackets we mentioned earlier. Still, this time we will calculate the tax due instead of calculating the percentage through the following equation:

Value = (Actual Value X Percentage) / 100. For example, if we want to know the value payable for the second bracket, whose net income ranges from 15 thousand to 30 thousand, the amount payable is (15000 X 2.5) / 100 = 375 pounds. If the maximum income is 30,000 pounds, then the amount payable is (30,000 X 2.5) / 100 = 750 pounds.

Another illustrative example of an income tax bracket. If the net profit is 45 thousand pounds, i.e., within the fourth bracket, the amount payable is equal to (45000 X 15) / 100 = 6750 pounds.

Some may now wonder about the possibility of a company taking over the task of dealing with the tax authority and providing all legal advice related. Here you will not find a better choice than the Egyptian Certified Public Accountants company to take over this matter.   

ECPA services for tax

Income tax brackets are not the only type of tax; there are different types. You will need experienced and competent to manage these matters. 

Taxes are not to be underestimated to avoid legal accountability. The most important thing about ECPA is its ability to handle tax tasks, protecting you from its intricate details. Services offered by ECPA include:

  • Providing tax and accounting advice and submitting the annual tax return.
  • Settlement of yearly taxes on wages and salaries.
  • Submit a comprehensive report on the company’s profits and all related tax obligations.
  • Negotiating with the tax authority and solving various tax problems.

Summing up, it can be said that the income tax brackets have undergone many changes, which resulted in the emergence of a new bracket, the 2.5% bracket, and a decrease in the payable value to some brackets to achieve equality and tax justice among the different segments of society. 

Income tax brackets

FAQs about Income tax

Who is exempt from income tax?

Workers in self-employment and craft industries.

Are allowances subject to income tax?

Yes, staff allowances are included in the income tax rate.

What is the difference between income tax and value-added tax?

Income tax is an annual amount of money levied at different rates on individual and corporate, while value-added tax is a consumption tax imposed on products.

Can income tax be paid in instalments?

Income tax was paid in instalments after the Corona pandemic to reduce the financial burden on various companies and institutions.