Egypt’s workforce, comprising approximately 33 million people, is diverse and spans key sectors, including agriculture, energy, manufacturing, and technology. Employees are typically paid monthly, as outlined in employment contracts, with labor laws ensuring compliance with wage and working condition standards. Tax residents are subject to progressive personal income tax rates ranging from 0% to 27.5%, depending on income levels.

Compliance with payroll and tax regulations is critical for doing business in Egypt. Adhering to these rules helps avoid penalties, ensures efficient operations, and builds trust with employees and authorities. For international companies, compliance strengthens credibility with the Egyptian government and supports market expansion.

Employer Payroll Tax Rates in Egypt

Breakdown of Employer Contributions

Payroll taxes in Egypt encompass social security contributions, health insurance contributions, and personal income tax withholdings, managed by the Egyptian Tax Authority (ETA) and the National Organization for Social Insurance (NOSI). These contributions fund pensions, healthcare, unemployment benefits, work injury coverage, and other social services, supporting millions of beneficiaries across the nation.

Employer and Employee Responsibilities

Employers are responsible for withholding personal income tax and remitting social security and health insurance contributions to the appropriate authorities.

Key Components:

  • Social Security Contributions: Cover pensions, unemployment, sickness, and work injury benefits.
  • Health Insurance Contributions: Fund medical care through Egypt’s comprehensive health insurance system.
  • Annual Tax Reconciliation: Employers must file a yearly reconciliation report by January 31 of the following year, detailing salaries, taxes withheld, and contributions made.

Employers must register new employees with the ETA and NOSI within 15 days of hiring. Contributions and tax withholdings are due by the 15th of the following month.

Contribution rates and regulations are subject to annual updates, so businesses should regularly consult the Egyptian Tax Authority website for the latest information.

For simplified compliance, partnering with an Egyptian PEO service or an Employer of Record (EOR) service can streamline payroll management, handling everything from salary payments to benefits administration.

Employer Payroll Tax Rates in Egypt

Breakdown of Employer Contributions

  • Social Security Contributions: Employers contribute 18.75% of an employee’s total social insurance salary (covering pensions, sickness, unemployment, and work injury benefits). Employees contribute 11%. The contribution base is capped at EGP 14,500 per month in 2025, with a minimum of EGP 2,300 per month. These caps increase by 15% annually until 2027, then after which they are adjusted for inflation starting in 2028.
  • Health Insurance Contributions: Employers contribute 3.25% of the employee’s socially insurable wages, while employees contribute 1%. An additional 3% employee contribution applies for spouse unemployment insurance, and 1% per dependent. There is no cap on health insurance contributions.

Industry-Specific Considerations

Egypt applies specific tax considerations that vary by industry:

  • Tax Incentives: Companies in strategic sectors such as technology, renewable energy, and manufacturing may qualify for exemptions or reduced rates through the General Authority for Investment and Free Zones (GAFI).
  • Minimum Wage: Set at EGP 7,000 per month for private sector employees as of March 2025, impacting payroll calculations.
  • Exempt Benefits: Certain allowances, such as meals and housing (up to 30% of total salary), are exempt from social insurance calculations. Tax-exempt benefits include group transportation and specific employee profit shares.

You should budget for mandatory contributions and consult local experts or the ETA website to leverage exemptions or incentives.

Overview of Income Tax in Egypt

Egyptian residents are taxed on their worldwide income, while non-residents are taxed only on income sourced in Egypt. The personal income tax, commonly referred to as the Income Tax, is administered by the Egyptian Tax Authority (ETA).

Personal Income Tax Brackets and Rates

The personal income tax in Egypt follows a progressive system, with higher earners paying higher rates. Below is the breakdown of tax brackets for 2025, based on annual income:

Annual Income (EGP) Tax Rate (%)
Up to 40,000 0%
40,001–55,000 10%
55,001–70,000 15%
70,001–200,000 20%
200,001–400,000 22.5%
400,001–1,200,000 25%
Over 1,200,000 27.5%

These rates apply to salaried income after deducting mandatory social security and health insurance contributions. Taxpayers must file annual returns by January 31 of the following year. 

Non-residents are subject to a 10% withholding tax on Egyptian-sourced income, such as salaries or professional fees, with no deductions unless reduced by a tax treaty. Capital gains are generally exempt for individuals, unless derived from real estate or securities traded on the Egyptian Exchange, which are taxed at a rate of 22.5%.

Tax-Free Allowances and Deductions

Egypt’s tax system offers several deductions to reduce taxable income, including:

  • Personal Exemption: EGP 15,000 annually for all taxpayers.
  • Social Security Contributions: The mandatory 11% employee contribution to the National Organization for Social Insurance (NOSI) is deductible from taxable income.
  • Professional Expenses: Work-related expenses, such as travel or training costs, may be deductible if documented and approved by the ETA.
  • Family Expenses: Deductions of up to EGP 3,000 per dependent (spouse and up to two children) are available, subject to registration with the ETA.
  • Insurance Contributions: Contributions to private pension or health insurance policies may be deductible, up to a cap of EGP 3,000 or 15% of net income.
  • Charitable Donations: Donations to registered Egyptian charities are deductible, up to 10% of annual taxable income.

Key Components of Payroll in Egypt

Payroll Cycle and Pay Slips

Egypt follows a monthly payroll cycle, with salaries typically paid by the last working day of the month. Some employers offer performance-based bonuses or a 13th-month salary, processed separately.

Employers are required to provide employees with a monthly pay slip detailing:

  • Basic salary
  • Social security contributions (11% employee contribution)
  • Health insurance contributions (1% for employees, plus additional contributions for dependents)
  • Income tax withheld
  • Other deductions or benefits, such as meal or housing allowances

Employer Responsibilities for Payroll Tax Compliance

Employers are responsible for:

  • Calculating and withholding personal income tax based on the progressive rates above.
  • Contributing 18.75% of gross salaries to social security (NOSI), covering pensions, unemployment, sickness, and work injury benefits. The contribution base is capped at EGP 14,500 per month in 2025 (minimum EGP 2,300), increasing by 15% annually until 2027.
  • Contributing 3.25% of gross salaries to health insurance, with no cap. Employees contribute 1%, plus 3% for spouse unemployment insurance and 1% per dependent.
  • Filing monthly tax and contribution returns by the 15th of the following month and quarterly returns within one month after each quarter.

Common Payroll Errors and How to Avoid Them in Egypt

  • Misclassifying Employees: Employees and freelancers have different tax and social security obligations. Misclassification can lead to penalties. Verify classifications using Egyptian labor laws and ETA guidelines.
  • Incorrect Tax Calculations: Errors in applying progressive tax rates or social security caps can result in fines. Use payroll software aligned with ETA standards to ensure accuracy.
  • Breaching Overtime Rules: Egyptian labor law sets a 48-hour workweek, with overtime limited to 2 hours per day at 1.5 times the normal rate. Failing to track or compensate overtime correctly can lead to disputes and penalties.
  • Poor Record-Keeping: Incomplete records can complicate audits and incur penalties. Adopt digital solutions to store and organize payroll and tax documents, ensuring compliance with ETA requirements.

Tax Treaties and Withholding Taxes

Egypt’s tax treaties and withholding regulations impact payroll and cross-border payments, aiming to prevent double taxation and ensure compliance with tax laws.

Egypt’s Double Taxation Treaties

Egypt has double taxation treaties (DTTs) with over 50 countries, including the United States, the United Kingdom, and Saudi Arabia, to prevent double taxation of the same income. These treaties allow foreign workers and businesses to claim tax credits or exemptions for taxes paid in Egypt against their home country’s tax liability, reducing over-taxation. Employers should verify applicable treaties via the ETA to optimize tax obligations.

Totalization Agreements

Egypt has social security totalization agreements with countries like Jordan and Sudan to prevent double contributions to social security systems. These agreements ensure expatriates contribute to only one country’s system (typically their home country or Egypt, based on residency) and receive benefits accordingly. Employers must verify applicable agreements via NOSI to avoid overpaying contributions.

Withholding Tax on Foreign Income

In Egypt, dividends paid to non-residents are subject to a 10% withholding tax, unless reduced by a DTT. Royalties and interest payments are subject to a 20% withholding tax, with potential reductions under specific treaty conditions. Services provided by non-residents are subject to a 20% withholding tax, encompassing income tax and other levies. Employers must file withholding tax returns and payments by the 15th of the following month to comply with ETA regulations.

Egypt Payroll Tax Calculator

The RemotePeople Global Payroll Calculator is a handy tool that calculates payroll taxes for local and foreign employees in any country. 

How the Calculator Works

Select the country, which is Egypt in this case. Then, choose the employee type: local or expat.

Select the calculation period, such as monthly or annually, and enter the gross salary. The default currency for payroll calculation is set to the country’s national currency. You can also change the currency to USD, EUR, and other popular currencies for expats. It’s free to use.