Egypt to deduct 1% from citizens’ salaries to offset economic fallout of coronavirus

Egypt will be deducting 1 percent from citizens’ salaries for 12 months starting July 1 to offset the economic fallout of the coronavirus, according to a draft law approved by the Cabinet on Wednesday.

The tax will be imposed across all sectors of the economy in both the public and private sectors for net monthly salaries that exceed 2,000 Egyptian pounds ($127), the Cabinet added in a statement. A tax of 0.5 percent will be also deducted from state pensions.

The move comes as part of efforts exerted by authorities in Egypt to deal with the economic impact of the pandemic, which has brought tourism to a standstill, caused major capital flight, and threatened remittances from Egyptians expatriates.

Revenues from the new salary tax will be go for assisting organisations and workers hit by the fallout from the pandemic, as well as for direct support to some citizens and funding for the medical sector, the statement read.

Those affected economically by the outbreak may be exempted from the new tax, it added.

To date, the total number of coronavirus cases in Egypt is 14,229, including 680 fatalities and 3,994 recoveries, and on Wednesday the country saw its biggest rise in daily cases so far of 745.

The government has received $2.77 billion in emergency financing from the International Monetary Fund (IMF) to help close a balance of payments gap triggered by the coronavirus, and is in talks with the Fund over a standby loan.