The Additional 5 % tax is provisional, for 3 years Shall be payable as of January 2015 together with tax returns of the current year
A List of the social public projects from which investors can select to finance
Minister of Finance, Mr. Hany Kadry Dimian confirmed that the draft law regarding the introduction of the additional 5 % Tax on individuals whose year income exceeds one million EGP, targeting three main pillars; the first is the introduction of community participation in establishing projects and providing public services from which all Egypt’s social groups shall benefit , specially low- and lower- income groups. Such new tranche was basically proposed by a great number of civil society organizations and investors.
The Minister added that the second pillar is in more public resourcing to boost general budget expenditure programs to reduce overall deficit, as it is one of the reasons of increasing prices and inflation rate which have greater effect on low-income groups and the poor.
The Minister added that the third pillar of the draft law is that it is within a broader vision of the tax reform system by expanding tax base through joining new tax tranches without affecting low-income groups.
The aforementioned three pillars are reflected in the philosophy of the draft law, as the additional 5 % tax shall be implemented provisionally only for three years 2014, 2015, 2016. It shall be payable as of next January with tax returns. It also considers social dimension as it is imposed on the higher income segment of taxpayers whose year income exceeds one million EGP.
The Minister said that identification of the tax base is the same general income tax identified by law no. 91 / 2005.He noted that the most significant of the new tax is that it grants taxpayer the right to direct the paid tax amount to finance social or public project in health, education or any other public service project. A more detailed project list shall be issued following concluding the agreement with the Minister of Planning and International Cooperation. During payment of the additional 5 % tax, taxpayer can select among public and service projects to finance, including all educational, health, agricultural or other service areas in all Egypt’s governorates.