Egypt’s payroll compliance in 2026 continues to evolve under tightened fiscal policies, with updated progressive income tax brackets, social insurance contribution adjustments amid inflation pressures, and accelerated digitalisation of payroll reporting through the Egyptian Tax Authority (ETA) and social insurance portals. For companies operating in Egypt, these changes demand precise withholding, monthly electronic filings, and alignment between payroll systems and government platforms, alongside several procedural rules that HR teams often under-prioritise.
Updated income tax brackets for 2026
Egypt maintains a progressive personal income tax system taxing residents on worldwide income and non-residents on Egypt-sourced income, with brackets unchanged from recent reforms but a EGP 20,000 personal allowance applying universally (higher for disabled individuals). Key 2026 brackets post-allowance and social insurance deductions are:
| Annual Taxable 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 |
| Above 1,200,000 | 27.5 |
Employers must withhold monthly via payroll, reconcile annually by March 31, and handle expatriates under bilateral treaties to avoid double taxation. A less-discussed 2026 nuance: high earners lose progressive bracket benefits if total income exceeds thresholds, forcing flat higher rates on excess, which requires granular payroll coding of bonuses and allowances.
Social insurance contribution changes
Social insurance caps and rates (typically 14% employer + 11% employee on monthly gross up to EGP 4,000 basic + EGP 1,000 housing/spouse allowance) remain central, but 2026 enforcement stresses real-time digital updates for joiners/leavers/promotions via the Unified National Social Insurance Platform. Late filings incur EGP 100/day penalties, and mismatches with tax filings trigger audits.
- Caps adjust annually for inflation; 2026 guidance flags stricter scrutiny on “basic wage” definitions to prevent under-reporting via inflated allowances.
- Exemptions apply to certain expat secondees, but companies must apply for waivers pre-onboarding.
Overlooked by HR: pro-ration for part-timers and mid-month terminations must sync exactly with payroll records, as digital reconciliation flags discrepancies automatically, risking retroactive assessments.
Digitalisation of payroll reporting
The ETA’s e-Fatoura and social insurance portals mandate fully electronic payroll submissions from Q1 2026, integrating tax withholding, social contributions, and wage declarations into a single monthly file by the 25th. Non-compliance blocks tax clearances and work permits.
- XML/EDI formats required; manual uploads phased out.
- Real-time API links for large firms (>500 employees) to flag anomalies like overtime spikes or wage drops.
A key under-discussed shift: multinational employers must allocate Egypt payroll to local tax entities with transfer-pricing documentation embedded in filings, exposing intra-group recharges to ETA review.
Under-discussed 2026 policies critical for HR
Several procedural mandates carry high risk for Egypt-based companies but evade routine checklists.
- End-of-service pro-ration: Gratuity (1 month basic per year, pro-rated) must deduct unpaid leave/taxes precisely; digital audits cross-check against social filings.
- Expat tax equalisation: Employers sponsoring expats must gross-up for home-country taxes if higher, with proof in payroll records to avoid ETA penalties.
- Minimum wage enforcement: EGP 6,000/month sectoral floors (e.g., manufacturing) apply via payroll proof; violations halt permit renewals.
- Annual reconciliation mandates: Employees with multiple jobs must file consolidated returns, but employers pre-populate data via ETA portal—errors trigger joint liability.
For HR teams in Egypt, 2026 payroll means building withholding and filing accuracy into core systems, treating tax/social data as a unified digital thread that safeguards compliance, cash flow, and operational continuity.