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In a bid to encourage local and foreign investment, Egypt has lowered the top tax rate for companies and individuals from 25% to 22.5%, but has lowered the threshold for the application of the top rate to incomes of E£200,000/year ($25,500) from E£250,000.
As part of the same move, Egypt has also suspended for two years a 10% tax on capital gains and abolishes the supplementary tax levied on individual incomes exceeding E£1mn introduced in 2014-15 (MEES, 13 June 2014). The amendment is intended to make the taxation system more progressive and to reduce the burden of taxation on low-income bracket Egyptians.
In March the government agreed to unify the income tax rate at a ceiling of 22.5% including the new special economic zones, but the latest amendment did not cover these special economic zones. As part of Egypt’s five-year plan to overhaul the economy battered by years of political turmoil, the government in 2014 cut energy subsidies and introduced a raft of taxes, including property taxes, aimed at reducing the country’s ballooning deficit. The objective is to reduce the projected budget deficit to 8.9% of GDP in the current fiscal year starting on 1 July 2015, from about 10.8% the previous year.
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