Different companies and businesses are charged different types of taxes that must be paid on time and in the exact amount. Any errors in calculating the value of the tax imposed on your company may result in you being subjected to legal accountability and consequently to punishment according to the law of the country in which you operate.

For this reason, we have compiled for you in this article a complete guide to the types of taxes that countries impose on individuals, entities, and companies, and how you can calculate them in a correct and accurate way.

Definition of tax
Tax is defined as what the state imposes on both individuals and companies of different amounts of money, determined by a certain percentage. The tax amounts are then directed to provide the various services that states provide to individuals, such as providing social services, financing sectors such as the police, army, and education, and supporting... State infrastructure, in addition to supporting various basic commodities.

What are the types of taxes?
Taxes are divided into two basic types: direct taxes and indirect taxes. Each of them includes different types of taxes, which differ in determining their value at different percentages according to each type. Below is a detailed explanation of each type of these taxes:⬇️

First: direct taxes
These are the taxes that are imposed and collected directly from both individuals and companies, and under this type of direct taxes there are different types of taxes, which are:

1- Income tax
There are two types of income tax:

Personal income tax for individuals and is paid based on annual income up to a certain limit.
Income tax on institutions and companies, which is imposed on the annual net profit of those institutions.
The income tax value is calculated through financial reports prepared in accordance with income tax rules.

💡It is worth noting: The Fekra POS and Fekra ERp programs provide a complete and comprehensive set of accurate and comprehensive financial reports that help companies, institutions and various businesses calculate their taxes very accurately without any errors.

As for the annual financial reports related to companies, they are not approved until they are reviewed and signed by certified tax experts.

Income tax is calculated on:

Income from property.
Income from real estate.
Income from investments of all kinds.
Income from work.
How is income tax calculated for individuals?

Income tax for individuals is divided into brackets according to the individual’s annual income, and a specific percentage is deducted from each bracket. These brackets are:

Bracket 1: 10% tax is deducted on income ranging from EGP 40,001 to EGP 55,000.
Bracket 2: 15% tax is deducted on income ranging from EGP 55,001 to EGP 70,000.
Segment 3: 20% tax is deducted on income ranging from EGP 70,001 to EGP 20,000.
Slide 4: 22.5% tax is deducted on income ranging from EGP 200,001 to EGP 400,000.
Slide 5: A 25% tax is deducted on income ranging from 400,001 to 1.2 million pounds.
Slide 6: A rate of 27.5% is deducted for any income exceeding 1.2 million pounds.
How is corporate income tax calculated?

After calculating the annual income of companies, it is divided into:

19% for companies producing various goods.
23% for the public works sector, tourism sector and construction.
26% for other activities.
The tax is deducted from companies operating according to the special systems at the following rates:

10% for companies operating in the foreign maritime sector, in addition to the return on corporate debts and deposits.
20% of the funds deducted from corporate sources.
24% of foreign companies providing services only.
40% of the funds obtained by companies through non-nominal fund bonds.
2- Profits tax on commercial and industrial activity
It is one of the types of taxes that the state imposes on commercial and industrial establishments, through a percentage of the value of the annual profits of those establishments, in accordance with Law No. 91 of 2005.

These taxes are imposed on establishments whose annual profits exceed 50,000 Egyptian pounds.

This tax applies to Egyptian and foreign establishments, whether commercial or industrial, which includes:

Limited liability companies.
Joint stock companies.
Individual companies.
Small and medium enterprises.
How is profits tax calculated?

A 22.5% deduction is made for corporate profits amounting to EGP 300,000 and more.

The tax is calculated based on the following:

A 0.5% discount is made for raw materials and special supplies.
5% for financial and engineering consulting.
2% for services and maintenance.
The profit tax is deducted on the original invoice before deducting the sales tax.

This tax is calculated using the following equation:

(Commercial and industrial profits tax = total annual profits x tax rate)

3- Labor gain tax
This tax is imposed on the net profits of companies and institutions and is deducted from the monthly salary of employees in those institutions. The institution is obligated to provide it monthly to the Tax Authority within a period not exceeding fifteen days.

4- Real estate transaction tax
The real estate transaction tax is collected by the property owner when he sells any property he owns, whether it is an apartment, villa, house, land, in addition to shops.

There are some cases in which real estate is exempt from paying the real estate disposal tax, which are:

Lands prepared for construction in villages.
Properties that are transferred by inheritance.
Real estate that is gifted or donated to a family member.
Real estate purchased from real estate companies and private residences in the state.
Real estate donated to public ownership.
Farmland.
Real estate that is allocated as a share of the capital of joint stock companies.
How is the real estate transaction tax calculated?

The real estate tax rate of 2.5% is deducted from the price of the property designated for sale.

Second: Indirect taxes
The state collects this type of tax indirectly through an intermediary, that is, not from the person on whom it is imposed