Before you calculate anything
Most payroll errors start before the calculation. A late leave request, an unrecorded loan instalment or an overtime sheet that arrives after the cut-off will produce a wrong payslip even if every formula is right.
- 01Set a cut-off date for attendance, leave and overtime and tell managers about it in advance.
- 02Close attendance for the month: lateness, absence and overtime according to your company's rules.
- 03Confirm new joiners, leavers and any changes to salary, allowances or job grade during the month.
- 04Collect deductions that are not attendance-related: loan instalments, advances, penalties and benefits.
From gross pay to net pay
Start from each employee's gross pay — basic salary plus allowances, overtime and any variable pay for the month — and work down to net pay in a fixed order, so that every payslip can be explained line by line.
- 01Calculate social insurance under Law 148/2019 on the employee's insurable wage, within the minimum and maximum insurable wage published for the year. The employee's share is deducted from pay; the employer's share is a company cost.
- 02Calculate salary tax under Law 26/2020 on taxable pay after the personal exemption, using the current brackets.
- 03Deduct the martyrs' fund contribution and any other statutory deductions.
- 04Deduct the non-statutory items you collected earlier: loans, advances and penalties.
- 05Review the result before approval: compare totals with last month by branch and department and investigate large changes.
Paying employees
Once payroll is approved, produce the bank transfer file in your bank's format and send each employee a payslip. Employees should be able to see how their net pay was reached, especially tax and insurance.
Paying tax and insurance
The salary tax you withheld is paid to the Egyptian Tax Authority and the social insurance contributions to the National Organization for Social Insurance, both monthly and by the deadlines each authority sets. Keep the payroll register, payslips and payment receipts for every month — they are what you show in an inspection.
Salary tax also has an annual settlement at year end, which is easier if every month's calculation is kept with the inputs it used.
Keep the rates current
Tax brackets, the personal exemption and the insurable wage limits change by law or decree, often once a year. Check the current figures at the start of each year and when amendments are announced, and record from which month each change applies.
This guide is general information, not tax or legal advice. Rates, limits and deadlines change; confirm current figures with your accountant or the relevant authority.