CAREER ADVISOR

In this new section brought to you by the “Interest Zone”, responses to two of our visitors are provided, addressing: “Employee Income Tax” and “Compensation Guidelines”. All reasonable questions related to careers, skill development or employment related issues – sent to advisor@skill-link.com - would be addressed in this section every week.

 

( 1 ) Employee Income Tax 
 
First of all congratulations for this new Section.. It really is needed in the region. Well Done.
Now, I'm a financial consultant in an Egyptian firm, and I have no clue of the current law about my tax deduction category. I'm single now, but to be married soon. 
Can you tell us; all those who know nothing about the limits of exemption and all other stuff?
 
T.M. – Cairo

Replying:
 
Dear Mr. M
 
Thank you for your kind words; we hope to meet our Interest Zone visitor expectations.
Regarding your question for an Egyptian employee, the following tax rules apply:
 
Total Gross Compensation Deductions:
- a) Representation allowance (maximum LE 2,500 per annum)
- b) Job Nature allowance (maximum LE 480 p. a.)
- c) Production incentive (not to exceed 100% of salary, maximum of LE 3,000 p.a.) and the total of a + b + c should not exceed LE 4,000 p.a.
- d) employee contribution to social security
e) Tax pool = Gross Compensation – above-mentioned deductions out of which the following could also be deducted!
- f) 10% of (e) your cost of generating income
- g) an LE 2,000 flat personal deduction
- h) annual family deduction (LE 2,000 if single, LE 2,500 if married / no children, LE 3,000 if married with children)

- You are also allowed to deduct up to LE 1,000 is you paid them for an insurance policy where you or your wife / children are the beneficiaries.

i) Your net taxable income = e – (f + g + h)

Taxes are calculated as follows:
- First LE 50,000 p.a. (of i) is subject to a 20% tax rate
- Above LE 50,000 is subject to a 32% tax rate.
- There is also an additional State Revenue Tax of 2% for amounts (as per i) exceeding LE 18,000 p.a.

( 2 ) Compensation 
I wanted to know more about compensation.
I am a business graduate from the AUC, Feb 1999. I have a diploma in Advertising and I am currently working on a Masters Degree. I have done many summer internships and since I graduated, I worked in marketing positions for large telecom companies and a language training company. Therefore I wanted what is the salary range I should ask for when I go to interviews.

M.G. - Cairo

Replying:

Dear Ms. G
This is a very difficult question, it started when ‘paid’ employment appeared on earth and it will remain as long as there is human life !

Compensation has no scientific formula; it depends on a lot of things and they have no 'fixed' percentages. It does not only rely on experience and qualifications but also on the nature of the job and the employer (the hiring organization) as well.

Additionally, in some sales, marketing or other business development jobs, many companies – rightfully so – include a variable element related to results. The variable element is higher as a percentage of the total income for sales jobs since they have a more direct contribution to results then says a marketing job. 

The other factors contributing to determining the compensation:

  • What sector / industry will the job be in? All other things equal, sectors like Telecom or IT would on average be paying more than Textile, Education or Trading…
  • The name of the company counts. Professionals are willing to get less if the 'employer' name is of value on their CVs…i.e. working for Xerox Egypt versus working for El Masreya El Motaheda Lel' agheza El Kahrobayea ! Or CitiBank versus the Agriculture Credit Bank.
  • Is the product / company new to the market.... so they have to create market share / awareness or it has been selling under the company name for years. This is important for marketing and other business development roles.
  • Obviously what sort of technical background (industry knowledge) is required from the employee? This is important in a number of sectors like: automotive, engineering equipment, paints, application software etc…
  • The other benefits provided by the employer (structured training, mobile phones, transportation, medical insurance etc…)
  • Location of both the employer company’s offices and its clients.... if someone will be located in Dokki and selling to near by clients is not like someone being located in the Sixth of October City and having to sell to factories in Borg El Arab, Sadat City, 10th of Ramadan, Port Said etc..... this has to be factored in.

So again, it is difficult to present you with a numerical figure, however you should be getting a higher annual income from employers to whom your previous experience (sector & function) in addition to education is more relevant.

Your summer internships and your post graduate training / education reflect a person who is serious and eager to develop. This is a big plus. However having worked for three employers (as per your message) in just two years since graduating is not that positive, specially when the employers are reputable names. So many moves worry a potential new employer… you must have good stories to justify your moves.

If we must give some annual income guidelines, based on the limited information we have, it should be in the LE 24,000 to LE 42,000 bracket.
 
Note from the editor: 
Employer names and inquiry sender names were withheld for confidentiality

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