2024 Employee Tax Calculation

Example 1: Tax Calculation for an Employee in 2024

• An employee in a private sector company has a basic salary of L.E 15,000, including periodical raises.
• The employee also receives a nature of work allowance of L.E 350.
• A monthly incentive of 75% of the basic salary is offered.
• Monthly Social insurance contributions of L.E 333 are deducted from the salary.
• On July 1, the basic salary increased to L.E 20,000, and the nature of work allowance increased to L.E 500 while the incentive rate stayed the same.
• On July 1, the employee bought a car for his wife for L.E 120,000 and paid half in cash, with the rest in 50 monthly installments of L.E 1,500.
• On July 1, the company provided a free private flat (housing) with a monthly rent value of L.E 500 and a laptop valued at L.E 6,000 for work use.
• On June 28, an L.E 500 monthly premium is paid for a life insurance policy for his wife and minor children.
• Starting 1/7/2020, social insurance contributions deductions increased to L.E 433.
• At the end of the year, the employee received an annual profit share of L.E 15,000.
• Monthly tax on salaries and the like for 2024 and tax on profit share are to be calculated.

Taxable Items and Dates of Occurrence

• Changes in monthly taxable items require differentiation by their date of occurrence.
• From 1/1 to 30/6, the basic salary plus periodical raise is L.E 15,000.
• From 1/1 to 30/6, the nature of work allowance is L.E 350.
• From 1/1 to 30/6, the incentive is 75% of the basic salary plus periodical raise (75% × 15000 = L.E 11,250).
• From 1/1 to 30/6, social insurance contribution on basic and variable salary is L.E 333.
• From 1/7 to 31/12, the basic salary plus periodical raise is L.E 20,000.
• From 1/7 to 31/12, the nature of work allowance is L.E 500.
• From 1/7 to 31/12, the incentive is 75% of the basic salary plus periodical raise (75% × 20000 = L.E 15,000).
• From 1/7 to 31/12, social insurance contribution on basic and variable salary is L.E 433.
• From 1/7 to 31/12, a private flat (housing) for him and his family is a free in-kind taxable variable benefit for personal use is L.E 500.
• From 1/7 to 31/12, the life insurance premium is L.E 50.
• Any taxable amount change during the month shifts to the beginning of the next month.

Monthly Tax Calculation (1/1 to 30/6)

• Monthly taxable basic salary (+ periodical raise only)(2 items): L.E 15,000
• Monthly taxable variable salary : (up to 14 items):
  • Nature of work allowance: L.E 350
  • Incentive: L.E 11,250
• Total Monthly Basic and Variable Salary: L.E 26,600
• Less, Personal Exemption (per month): L.E 1,666.67
• Social insurance contributions (on basic and variable salary ): L.E 333
• Temporarily net monthly salary: L.E 24,600.33
• Less:
  • Contributions to private/special insurance funds: L.E 0
  • Life insurance Premiums For the taxpayer or in favor of his wife or his minor children only or any insurance premiums for pension entitlement: L.E 0
  • Health insurance contributions: L.E 0
• Compare between:
  • The actual total of the 3 amounts (a + b + c): L.E 0 V
  • 15% xTemporarily net monthly salary: L.E 3,690.05
  • (L.E 10000 ÷ 12): L.E 833.3
• The lowest amount deducted: L.E 0 V
• Net monthly taxable income: L.E 24,600.33 Convert the monthly income into annual income: L.E 295,200
• Less:
  • First bracket exemption (Minimum cost of living): (L.E 40,000)
• Tax base: L.E 255,200
• Tax Base = L.E 255,200
• First Bracket (L.E 40,000 at 10%):-
• Second Bracket (L.E 15,000 at 15%): L.E 1,500
• Third Bracket (L.E 15,000 at 15%): L.E 2,250
• Fourth Bracket (L.E 130,000 at 20%): L.E 26,000
• Fifth Bracket (Remainder L.E 95,200 at 22.5%): L.E 21,420
• Sixth Bracket: -25%
• The annual tax amount (due): L.E 51,170
• Monthly tax due to be paid on salaries and the like (deducted at source by the employer) from 1/1 to 30/6 (Jan., Feb., March, April, May and June) : L.E 4,264.17

Monthly Tax Calculation (1/7 to 30/12)

• Monthly taxable basic salary (+ periodical raise only): L.E 20,000 (+) Add:
• Monthly taxable variable salary :
  • Nature of work allowance: L.E 500
  • Incentive: L.E 15,000
  • Housing (flat): L.E 500
• Total Monthly Basic and Variable Salary: L.E 36,000
• Less, Personal Exemption (per month): L.E 1,666.67
• Social insurance contributions (on basic and variable salary ): L.E 433
• Temporarily net monthly salary: L.E 33,900.33
• Less:
  • Contributions to private/special insurance funds: L.EO
  • Life insurance Premiums For the taxpayer or in favor of his wife or his minor children only or any insurance premiums for pension entitlement: L.E 500
  • Health insurance contributions: L.E 0
• Compare between:
  • The actual total of the 3 amounts (a + b + c): L.E 500
  • 15% xTemporarily net monthly salary: L.E 5,085.05
  • (L.E 10000 ÷ 12): L.E 833.3
• The lowest amount deducted: L.E 500 V
• Net monthly taxable income: L.E 33,400.33 Convert the monthly income into annual income: L.E 400,800
• Less:
  • First bracket exemption (Minimum cost of living): (L.E 40,000)
• Tax base: L.E 360,800
• Tax Base = L.E 360,800
• First Bracket (L.E 40,000 at 10%):-
• Second Bracket (L.E 15,000 at 15%): L.E 1,500
• Third Bracket (L.E 15,000 at 15%): L.E 2,250
• Fourth Bracket (L.E 130,000 at 20%): L.E 26,000
• Fifth Bracket (L.E 200,000 at 22.5%): L.E 45,000
• Sixth Bracket (Remainder L.E 800 at 25%): L.E 200
• The annual tax amount (due): L.E 74,950
• Monthly tax due to be paid on salaries and the like (deducted at source by the employer) from 1/7 to 31/12 (July, Aug., Sep., Oct., Nov. and Dec.) : L.E 6,245.83

Remarks on Tax Calculation

• Monthly car installments are non-taxable because they are a use of salary.
• The laptop used for work is non-taxable.
• There is no tax due on employees' profit share as the company should pay the tax on its profits to avoid double taxation.

Example 2: Tax Calculation for an Egyptian Employee in 2024

• An Egyptian employee receives the following monthly amounts in L.E:

  • Basic salary: 10000
  • Overtime: 300
  • Incentives: 350
  • Nature of work allowance: 250
  • Transportation allowance: 200
  • Clothing allowance: 300
  • Meal allowance: 200
  • Housing allowance: 500

• The employee pays L.E 300 monthly for a life insurance policy.

• The employee contributes L.E 100 monthly to a private insurance fund.

• On March 1, a refrigerator was bought for his wife for L.E 12,000, half paid in cash and the rest in 6 monthly installments of L.E 1,500.

• In April, the employee took 20 days of sick leave, but only 8 days were approved, deducting 12 days from the salary.

• On July 1, a monthly periodical raise of L.E 2,000 and a social raise of L.E 500 were granted.The nature of work allowance increased to L.E 500.A free flat with an estimated monthly rent of L.E 300 was provided, and the housing allowance stopped.

• On June 15, a car was provided for personal and business use, with monthly operating costs of L.E 600, and the transportation allowance stopped.

• The employee's monthly gym subscription costs L.E 150.

• On November 1, L.E 20,000 was received as his profit share.

• Social insurance contributions of L.E 133 (basic) and L.E 120 (variable) were deducted monthly from 1/1. From 1/7 contributions were L.E 173 (basic) and L.E 230 (variable).

• Calculate the tax due for April and December 2024. Working: | Items | 1/1 to 30/6 (Except April) | April (30 days) | 1/7 to 31/12 (December) | | :------------------------------------------ | :------------------------- | :------------------- | :---------------------- | | Basic salary (+Periodical raise) | 10000 | 10000 (same) | 12000 | | Overtime | 300 | 300 (same) | 300 (same) | | Incentives | 350 | 350 (same) | 350 (same) | | Nature of work allowance | 250 | 250 (same) | 500 | | Life insurance premium | 300 | 300 (same) | 300 (same) | | Private insurance fund | 100 | 100 (same) | 100 (same) | | Unpaid sick leave (12 days) | - | (10000 × 12/30) 4000 | - | | Private flat (housing) | - | - | 300 | | Car | - | - | (600 × 20%) = 120 | | Social insurance contribution on basic and variable salary | 133 + 120 | 130 + 120 (same) | 173 + 230 |

Remarks

• Changes in monthly taxable income require differentiation based on the date of change.
• Transportation, clothing, meal, and housing allowances are non-taxable.
• Monthly refrigerator installments are non-taxable.
• A separate statement is needed for April due to unpaid sick leave.
• Social raises are non-taxable.
• Any changes get shifted to the beginning of the next month.
• Gym subscriptions are non-taxable.
• There is no income tax because the company pays it.

April Tax Calculation

• Monthly taxable Basic Salary (+ periodical raise only): L.E 10,000. (+) Add:
• Overtime: L.E 300
• Incentives: L.E 350
• Nature of work allowance: L.E 250 (-) Less:
• Unpaid sick leave (for the unapproved no. of days → 12 days): L.E 4,000. Total monthly basic and variable salary: L.E 6,900. (-) Less:
• Personal Exemption: L.E 1,666.67.
• Social insurance contributions: L.E 253. Temporarily net monthly salary: L.E 4,980.33. (-) Less:
• Contributions to private/special insurance funds: L.E 100.
• Life insurance Premiums: L.E 300. We should compare between:
• The actual total of these 3 amounts: 400 V
• (L.E 10000 ÷ 12): 15% xTemporarily net monthly salary L.E 747.05 : L.E 833.3
• The lowest amount of this comparison should be deducted √ (400) √ = Net monthly taxable income: L.E 4,580.33. Convert the monthly income into annual income: L.E 54,960. Less:
• First bracket exemption (Minimum cost of living): (L.E 40,000). = Tax base: L.E 14,960.

Continued : April Tax Calculation

• Tax Base = 14960
• First Bracket 10%: Remainder 14960 Then, The annual tax amount (due) = 1496 Monthly tax due to be paid on salaries and the like (deducted at source by the employer)
• For April = 1496/12= 124.67

December Tax Calculation

• Monthly taxable Basic Salary (+ periodical raise only): L.E 12,000. (+) Add:
• Overtime: L.E 300.
• Incentives: L.E 350.
• Nature of work allowance: L.E 500.
• Housing (flat): L.E 300.
• Car (600 × 20%): L.E 120.

Total monthly basic and variable salary: L.E 13,570. (-) Less:

• Personal Exemption: L.E 1,666.67.

• Social insurance contributions: L.E 403. Temporarily net monthly salary: L.E 11,500.33.

• Contributions to private/special insurance funds: L.E 100

• Life insurance Premiums L.E 300 We should compare between: The actual total of these 3 amounts 15% xTemporarily net monthly salary 15% × 11500.33 400 v L.E 833.3 1725.05 The lowest amount of this comparison should be deducted v = Net monthly taxable income

6. Convert the monthly income into annual income Net annual taxable income from salaries and the like after all deductions and personal exemption = Net monthly taxable income × 12 = 11100.33 × 12 = 133203.96 (Shall be rounded to the nearest lowest 10 pounds) L.E 11,100.33 15% × 11500.33 400 v (Shall be rounded to the nearest lowest 10 pounds) (-) Less:
7. First bracket exemption (Minimum cost of living) = Tax base L.E 133,200

• Compare between: L.E 400 v L.E 93,200

Contined : December Tax Calculation

Tax Base = L.E 93,200

• First Bracket: L.E 40,000.
• Second Bracket: L.E 15,000.
• Third Bracket: L.E 15,000.
• Fourth Bracket: L.E 130,000 at 20% Remainder L.E 63200 Then, The annual tax amount (due) = L.E 16,390 Monthly tax due to be paid on salaries and the like (deducted at source by the employer) For December L.E 1,365.83