Egypt’s Prorated Income Tax

We're excited to announce that we have added a new option to Egypt’s Payroll Setup, allowing users in Egypt to calculate prorated income tax on hiring and termination months. 

How to Activate Prorated Tax Calculation

 User Menu → System Preferences → Financial Setup → Payroll Setup

To activate the calculation of prorated income tax on hiring and termination months, on the Payroll Setup page, under the Tax section, activate the checkbox “Calculate prorated income tax on hiring and termination months”.

Once the option is activated, prorated income tax will be calculated on the salaries of the hiring and termination months.

Prorated Tax on Hiring and Termination Months Equation:

The Needed Variables:

Basic salary: 10,000.00 EGP

Allowances: 5,000.00 EGP

Working days: 10 days

Incentive (One-time financial income): 500.00 EGP

Without pay (One-time financial deduction): 200.00 EGP

Monthly personal exemption = 750.00 EGP

Social Insurance Salary = 9,400.00 EGP

Social Insurance deduction = 11%

Hiring and termination calculation base = 30 days, yearly calculation base = 360 days

Sample Calculation:

Social insurance deduction (11% ) ✖ Social Insurance Salary (9,400) = 1,034.00 EGP

Tax pool = ((10,000+5,000-750)/30✖10) + 500 - 200 - 1,034 = 4,016 EGP

Annual tax pool = 4,016 / (10/360) = 144,576 EGP

Annual tax= (15000✖0%) + (15000✖ 2.5%) + (15000✖10%) + (15000✖15%) + (84576 ✖20%) = 21,040.20 EGP

Prorated monthly tax = 21,040.20✖(10/360) = 584.45 EGP

 Where to View the Calculated Prorated Income Tax

Employees Salary Slips

If the employee is subject to tax laws, the Prorated Income Tax can be viewed on the salary slips of their hiring and/or termination months.

Go to  Main Menu → Payroll → Manage Financials→ Manage Salaries and click on “Details” to view the salary slip.