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Tax
Accounting
24ACC09H
Tutorial 3:
Introduction to
Tax on Salaries and the Like
Tutorial Outline
• Quick recap on:
Tax on Salaries and the Like
• MCQs
Question 1
Who is subject to tax on salaries in Egypt?
A) Only Egyptian residents
B) Only non-Egyptian residents
C) Both Egyptian and non-Egyptian residents if income is derived from the Egyptian
Treasury
D) Only private sector employees
Question 2
Which of the following is NOT considered part of taxable salary income under
the given definition?
A) Wages
B) Remunerations
C) Capital Gains
D) Like Payments
Question 3
Salaries are paid to employees for which type of work?
A) Physical labor only
B) Intellectual or mental work
C) Volunteer work
D) Any type of work
Question 4
Salaries are paid to employees working in which sectors?
A) Only the private sector
B) Only the public sector
C) Private, public, and public business sectors
D) Only government organizations
Question 5
How frequently are wages and salaries typically paid?
A) Wages: Monthly | Salaries: Weekly
B) Wages: Annually | Salaries: Daily
C) Wages: Daily or Weekly | Salaries: Monthly
D) Wages: Every six months | Salaries: Annually
Question 6
Which of the following statements is TRUE about wages?
A) Wages are always paid monthly
B) Wages are compensation for manual work
C) Wages are only given to employees in government jobs
D) Wages are received for performing intellectual work
Question 7
Who can pay wages to workers?
A) Only government institutions
B) Only private enterprises
C) Both private and public enterprises, including companies
D) Only multinational corporations
Question 8
What does the term "the like salaries" include?
A) Only base salaries
B) Only wages for manual work
C) Bonuses, incentives, commissions, allowances, tips, or gratuities
D) Only government salaries
Question 9
Which of the following is NOT considered part of "the like salaries"?
A) Commissions
B) Stock market investments
C) Allowances
D) Incentives
Question 10
Why are bonuses, incentives, and commissions classified under "the like
salaries"?
A) Because they are periodic and similar to salaries
B) Because they are only given to government employees
C) Because they are deducted as business expenses
D) Because they are always fixed amounts
Question 11
What is the main condition for applying tax on salaries?
A) The employee must be self-employed
B) The existence of an affiliation relationship between an employee and employer
C) The employer must be a private sector company
D) The salary must exceed a certain threshold
Conditions for Levying Tax
The existence of an affiliation relationship between an employee and his
employer, which can be traced to one of the following:
Interference of
Employment Laws and
employer in the
Contract regulations
details of the work
• Employee is subject to • The relationship • Even with no contract.
supervision and control between the employee The employee is charged
of the employer. and the government, with fixing the work time
establishing for him and place and inflicting
certain rights and duties disciplinary penalties in
as soon as he assumes a case of the violation of
job in public sector) his job duties.
Question 12
Which of the following is NOT a way to establish an employer-employee
affiliation for tax purposes?
A) An employment contract with supervision and control by the employer
B) Laws and regulations governing public sector employment
C) The employer’s control over work details, even without a contract
D) All are ways to establish an employer-employee affiliation for tax purposes
Question 13
Which of the following best describes the role of laws and regulations in
establishing an employment relationship?
A) They only apply to private sector employees
B) They define rights and duties for public sector employees
C) They eliminate the need for taxation on salaries
D) They prevent employers from enforcing work hours
Question 14
Even without an employment contract, an employer-employee relationship can
be established if the employer:
A) Allows the employee to work from anywhere without supervision
B) Fixes work time and place and enforces disciplinary penalties
C) Provides payment but has no control over the employee’s work
D) Requires the employee to work only on a commission basis
Salaries and Remunerations of Chairmen
and Members of the Board of Directors
Public sector Public Sector
TOTALLY owned by PARTIALLY owned Private Sector
government by private sector
If the person is NOT a
The chairman and board shareholder, salaries and
Ordinary shareholders’
members' salary and remunerations paid in
compensation are taxed as return for managerial work remunerations are not
employees are taxed (considered as taxed.
an employee)
If the person is a The Chairman and
shareholder, salaries and Managing Directors taxed
remunerations are not only for the amounts
taxed because these made for their
amounts are part of the administrative
company net profit (managerial) work.
Question 15
How are the salaries and remunerations of chairmen and board members in
public sector companies or banks (fully owned by the government) taxed?
A) Exempt from taxation
B) Taxed as business income
C) Taxed as employees' salaries
D) Taxed at a flat rate of 20%
Question 16
Why are salaries and remunerations not taxed for shareholders in partially
state-owned companies?
A) Because they are considered part of the company’s net profit
B) Because they are considered personal expenses
C) Because they are automatically deducted from taxable income
D) Because shareholders do not receive compensation
Question 17
How are ordinary shareholders' remunerations taxed in private sector
companies?
A) They are taxed at a flat 15% rate
B) They are considered taxable salary income
C) They are not taxed
D) They are taxed only if the company operates internationally
Question 18
In private sector companies, when are the Chairman and Managing Directors
taxed?
A) When they receive dividends
B) Only when the company is publicly traded
C) When they receive payments for their administrative (managerial) work
D) When they hold more than 50% of the company's shares
Capital gains from Dividends
A 10% will be imposed on dividends paid by Egyptian companies unlisted on the
EGX to resident and non-resident shareholders.
1. If the dividends are paid by Egyptian
companies listed on the EGX.
The 10% will be reduced to
5% in two cases: 2. If the individual holds more than 25% of
the capital or voting rights of the
distributing entity for at least two years.
Question 19
What is the tax rate on dividends paid by Egyptian companies that are NOT
listed on the EGX?
A) 5%
B) 10%
C) 15%
D) 20%
Question 20
Which of the following conditions allows for a reduced tax rate of 5% on
dividends?
A) If the dividends are paid by Egyptian companies listed on the EGX
B) If the shareholder holds more than 10% of the company’s capital for one year
C) If the company operates in a free zone
D) If the dividends are paid in foreign currency
Question 21
What is the minimum percentage of capital or voting rights an individual must
hold to qualify for the reduced 5% tax rate?
A) 10%
B) 15%
C) 20%
D) 25%
Question 22
For how long must an individual hold at least 25% of the capital or voting rights
to qualify for the reduced 5% tax rate?
A) 6 months
B) 1 year
C) 2 years
D) 5 years
Capital gains from selling Shares
Capital gains realized by resident shareholders from the
sale of listed shares on the EGX should be subject to
capital gain taxes at the rate of 10%
Capital gains realized from the sale of unlisted shares
should be subject to individual income tax brackets
Capital gains realized from shares invested abroad would
be subject to the individual income tax brackets (if Egypt is the
centre of commercial industrial or professional activity of such individual)
Question 23
Which of the following statements is TRUE regarding capital gains taxation in
Egypt?
A) All capital gains are taxed at a flat rate of 10%
B) Capital gains from listed shares on the EGX are taxed at 10%, while unlisted
shares follow income tax brackets
C) Capital gains from shares invested abroad are always tax-exempt
D) Capital gains from unlisted shares are taxed at a lower rate than listed shares
Question 24
What is the capital gains tax rate on the sale of listed shares on the EGX for
resident shareholders?
A) 5%
B) 10%
C) 15%
D) 20%
Question 25
How are capital gains from the sale of unlisted shares or securities taxed?
A) At a fixed rate of 10%
B) Exempt from taxation
C) Subject to individual income tax brackets
D) Taxed at a flat 20%
Answers
# Answer
# Answer
1 C
14 B
2 C
15 C
3 B
16 A
4 C
17 C
5 C
18 C
6 B
19 B
7 C
20 A
8 C
21 D
9 B
22 C
10 A
23 B
11 B
24 B
12 D
25 C
13 B