How does an Employer of Record (EOR) manage payroll taxes in Egypt
- Natia Gabarashvili
- Oct 17
- 10 min read
Table of contents:
TL;DR
Hiring in Egypt comes with more moving parts than most companies expect, and payroll taxes are usually the first place things get messy.
Here’s the short version:
Employers in Egypt must pay around 18.75% in social insurance contributions, plus a small 0.5% payroll stamp duty.
Employees contribute roughly 11% to social insurance, and their income tax is progressive up to 25%.
All of it, income tax, insurance, filings, payslips — must be submitted in Arabic through Egypt’s government portals, every month, without fail.
One missed filing can mean retroactive taxes, fines, or even invalid employment contracts.
That’s where an Employer of Record (EOR) changes the game. They:
Register your employees with Egypt’s tax and social insurance authorities
Calculate, withhold, and remit every payroll tax on time
Issue bilingual, compliant contracts and payslips
Keep your records audit-ready, no surprises, no gray zones
You manage your team. They manage the risk.
Want the simple version of compliance?
Let Team Up handle payroll, taxes, and local employment in Egypt while you scale confidently across borders.
Introduction
You’d be surprised how quickly a “simple payroll slip-up” can turn into a full-blown compliance problem in Egypt.
One missed filing. One miscalculated withholding. One incorrectly classified “contractor.” That’s all it takes to invite the kind of attention you don’t want, from Egypt’s Tax Authority.
And that’s why understanding employer of record payroll taxes in Egypt isn’t optional anymore. It’s the difference between running a smooth, compliant operation and waking up to backdated tax bills you didn’t know existed.
See, payroll taxes here aren’t just about income tax. Employers are also on the hook for social insurance contributions, unemployment, and other mandatory deductions, some paid by the company, some withheld from the employee. It’s not hard math, but it’s layered, and if you’re hiring from abroad, it’s almost impossible to manage cleanly without local expertise.
That’s where an Employer of Record (EOR) steps in. Instead of juggling registrations, filings, and currency conversions, you hire through a local EOR that already knows how Egypt’s payroll system works.
They handle every part of the process, calculating payroll taxes, withholding employee income tax, filing monthly reports, and remitting payments to the right authorities, so your team stays legal, and your operations stay distraction-free.
It’s compliance without the chaos. You manage the people; your EOR manages the payroll.
Let's get into it.
Payroll taxes in Egypt: What employers actually pay
Let’s talk numbers, because when you’re hiring in Egypt, payroll taxes aren’t just a footnote on an invoice. They’re the backbone of compliance.
Here’s the short version: every time you pay an employee in Egypt, you’re responsible for more than just their salary. You’re also paying (and withholding) a stack of payroll taxes, some that come out of the employee’s paycheck, and others that only the employer covers.
So, what does that actually look like?
Employer-paid payroll taxes
These are the ones most foreign companies miss when they try to run payroll themselves. As an employer, you’re responsible for:
Social insurance contributions — roughly 18.75% of the employee’s gross salary. This covers pensions, work injury, and social security.
Unemployment insurance — part of the above contribution, but still your responsibility to calculate and remit correctly.
Stamp tax — a small deduction, usually under 1%, but required on every payslip.
These amounts aren’t optional. They’re calculated monthly and filed with Egypt’s Social Insurance Authority and Tax Authority. Miss a deadline, and you’re looking at penalties that multiply faster than your finance team’s blood pressure.
Employee-paid payroll taxes
Then there’s the employee side. You’re the one who has to withhold these and file them properly:
Income tax — progressive, up to 25%, based on the employee’s earnings.
Employee social insurance contribution — around 11% of gross salary.
This means if your developer in Cairo earns 30,000 EGP a month, you’re responsible for withholding and filing about 3,300 EGP in employee taxes, plus your own employer contributions on top.
Now, if that sounds like a lot of moving parts, it’s because it is. You’re managing different rates, agencies, filing systems, and legal deadlines, all in Arabic.
That’s why global employers rely on an Employer of Record (EOR) in Egypt. The EOR acts as the local employer, handling every payroll obligation on your behalf, from calculating employer payroll taxes to issuing bilingual payslips and remitting funds to the authorities. You get a compliant workforce; they get paid accurately and on time.
If you’re building a team in Egypt, this is where the “clean” in clean compliance really starts. The taxes aren’t negotiable, but with the right EOR service providers in Egypt, the process can be painless.
Payroll tax vs income tax: The key distinction
Here’s where a lot of foreign employers get tripped up: payroll taxes and income taxes aren’t the same thing.
What is payroll tax
Payroll taxes are what your company owes because you employ people in Egypt. They include things like social insurance and stamp duty, costs that fund national programs such as healthcare, pensions, and unemployment benefits.
These are employer obligations, calculated as a percentage of gross salary, and remitted by the employer directly to Egypt’s authorities every month. They’re not optional, not deferrable, and definitely not “we’ll figure it out later” material.
What is income tax
Income tax, on the other hand, is what your employees owe on their earnings. It’s personal. But here’s the catch: even though it’s the employee’s responsibility, you’re the one who withholds it and sends it to the Egyptian Tax Authority.
So, how are payroll taxes different from personal income taxes?
Payroll taxes are your company’s legal duty as an employer. Income tax is the employee’s liability; you just handle the paperwork. Both flow through your payroll, but they serve completely different purposes in the eyes of the state.
Let’s put it into perspective:
According to the OECD Global Tax Database, Egypt’s total social contribution burden for employers sits around 18–19% of gross payroll, compared to an OECD average closer to 23–25%. That makes Egypt relatively employer-friendly, but only if you’re filing correctly and on time.
That’s why most international teams don’t try to manage this manually.
Instead, they rely on an Employer of Record (EOR) to calculate, withhold, and remit both payroll and income taxes accurately, keeping every payslip clean, compliant, and audit-proof.
How to calculate payroll taxes in Egypt
Here’s the clean way to handle this without guesswork. We’ll walk through how to compute payroll taxes for a mid-level employee on 30,000 EGP/month and show exactly what the company pays vs what the employee sees on their payslip.
Assumption for the example: contributions apply to the full gross (up to the statutory cap). In real payroll, caps and thresholds change; your EOR applies the current limits automatically.
1) Start with gross salary
Gross salary:30,000 EGP
2) Subtract employee deductions (from gross)
Employee Social Insurance (≈ 11%)30,000 × 11% = 3,300 EGP
Employee Income Tax (progressive, up to 25%)Taxable base ≈ 30,000 − 3,300 = 26,700 EGPApply Egypt’s progressive brackets to the monthly taxable base. For a 30,000 EGP salary, a realistic monthly withholding is ≈ 4,800 EGP (illustrative).
This is where most errors happen. Calculating employer payroll taxes is straightforward; calculating personal income tax requires the current bracket table and allowances.
Your EOR applies the right brackets and updates when the ETA changes guidance.
Estimated net pay to employee:
30,000 − 3,300 − 4,800 = 21,900 EGP
3) Add employer-side costs (on top of gross)
Employer Social Insurance (≈ 18.75%)30,000 × 18.75% = 5,625 EGP
Payroll Stamp Duty (≈ 0.5%)30,000 × 0.5% = 150 EGP
Total employer cost (illustrative):
Gross 30,000 + 5,625 + 150 = 35,775 EGP
Gross → Net (quick visual)
Item | Amount (EGP) |
Gross Salary | 30,000 |
Employee Social Insurance (~11%) | −3,300 |
Income Tax Withheld (progressive) | −4,800 |
Net to Employee | 21,900 |
Employer on-top (quick visual)
Employer Obligation | Amount (EGP) |
Employer Social Insurance (~18.75%) | 5,625 |
Payroll Stamp Duty (~0.5%) | 150 |
Total Employer Cost | 35,775 |
Why this matters
When you’re calculating employer payroll taxes, the mechanics are simple but the details bite: changing caps, bracket updates, filing calendars, and Arabic-language submissions. An EOR takes the moving parts off your plate, computes, withholds, remits, and reconciles—so your numbers stay clean every month.
How an Employer of Record (EOR) handles payroll tax compliance
Let’s be honest, running payroll in Egypt feels simple until you realize how many government systems you have to register with just to pay one person legally. And every missed filing? It’s a fine waiting to happen.
That’s exactly what an Employer of Record (EOR) prevents. They take on the legal role of the local employer so you can hire fast, pay cleanly, and never think about Egyptian tax codes again.
The EOR’s legal role in Egypt
When you hire through an EOR, they become your legal employer in Egypt.
You still control the work, priorities, and performance. The EOR simply handles every legal, tax, and administrative step that keeps your team compliant.
Here’s what that means in practice:
1. Registration with Tax and Social Authorities
The EOR registers each employee with:
The Egyptian Tax Authority for income tax purposes.
The Social Insurance Organization for pension, healthcare, and unemployment coverage.
This ensures every hire is officially recognized and fully compliant under Egyptian labor law from day one.
2. Payroll calculation, withholding, and remittance
Every month, your EOR:
Calculates payroll taxes based on gross salary and applicable rates.
Withholds employee income tax and social insurance.
Adds employer contributions (around 18.75% for social insurance and 0.5% stamp duty).
Remits all payments to government authorities through official channels.
Everything’s handled in local currency, filed under the EOR’s Egyptian entity, and reported on time, no loopholes, no late fees, no “we didn’t know” excuses.
3. Payslips and local tax filings
Employees receive bilingual payslips (Arabic and English) that show:
Gross salary
Deductions (income tax, social insurance)
Net pay
The EOR also handles monthly and annual tax filings with Egypt’s authorities, generating all the documentation you need for internal or external audits.
4. Audit-ready recordkeeping
Your EOR keeps a complete digital trail, payroll ledgers, tax receipts, and compliance reports, available anytime. If an audit happens, they handle it. You stay out of the bureaucracy entirely.
What you get: One invoice, full compliance
Instead of managing multiple payments, filings, and government accounts, you get one clean monthly invoice. It covers:
Salaries
All payroll taxes and contributions
EOR administrative fee
That’s it,no hidden deductions or surprise filings. You stay lean, compliant, and audit-proof.
Compliance benefits: What you avoid with an EOR
You don’t realize how much peace of mind costs until you’ve paid for the opposite, like a retroactive tax bill or a lawyer translating your “template” contract into Egyptian legalese.
Hiring through an Employer of Record (EOR) is more than just convenience. It’s insurance against every silent payroll mistake that turns into a fine six months later.
Here’s what you stop worrying about the moment you let an EOR handle compliance in Egypt.
1. Fines for Late Payroll Filings
Miss a monthly payroll submission in Egypt, and the penalties start before you’ve even noticed the mistake. An EOR files every tax and social insurance declaration on time, in the right format, and through the official government portal. You’ll never hear from the Revenue Service unless it’s to confirm payment.
2. Retroactive Tax Payments
Many foreign companies discover too late that their “contractors” should’ve been employees — and the Egyptian Tax Authority doesn’t do grace periods. Your EOR eliminates that risk by classifying each hire correctly and paying every contribution monthly, not retroactively.
3. Invalid Employment Contracts
English-only contracts, missing clauses, or generic NDAs? None of them hold up locally. Your EOR issues bilingual, legally binding employment contracts that meet Egyptian labor code standards and protect you against reclassification, disputes, or wrongful-termination claims.
4. Loss of IP Rights
If your team builds your product under a non-compliant contract, there’s a chance you don’t legally own it. With an EOR, every contract includes local IP transfer and confidentiality clauses, ensuring all code, content, and data belong to your company, not the person who wrote it.
Final section: Why global companies choose Team Up
Payroll in Egypt isn’t complicated, until you’re the one responsible for getting it right. Between shifting tax brackets, social insurance filings, and the fine print buried in bilingual contracts, it’s not a system you want to learn by trial and error.
That’s why smart global teams don’t try to. They partner with an Employer of Record (EOR) that already understands the rules, the language, and the paperwork, so they can focus on building teams instead of managing compliance.
An EOR gives you what internal payroll systems rarely do: certainty. Every employee is registered, every deduction filed, every payment traceable. You get clean numbers, compliant contracts, and the kind of operational stability that keeps you off the radar of Egypt’s Revenue Service.
If your company is serious about hiring in Egypt, and doing it legally from day one, an EOR isn’t an add-on. It’s the foundation that makes your growth sustainable.
Team Up does exactly that. We hire, pay, and protect your people in Egypt, while you keep control of your roadmap. One partner. One invoice. Full compliance.
Ready to simplify hiring in Egypt?
Schedule a call with TeamUp and see how we can manage payroll taxes, compliance, and employment for you, so you can focus on building your team, not your tax filings.
Frequently asked questions
How are payroll tax expenses recorded in Egypt?
Payroll tax expenses in Egypt include income tax, social insurance, and employer contributions. These costs are typically recorded as part of your company’s total employment expenses. When hiring through an Employer of Record (EOR), all payroll, tax, and benefit costs are combined into a single monthly invoice, simplifying compliance and accounting.
What payroll taxes do employers pay in Egypt?
Employers in Egypt are responsible for several mandatory contributions on top of gross salary:
Social Insurance Contribution: 18.75% of the employee’s gross salary.
Medical Insurance Contribution: 3% of gross salary.
Unemployment Insurance: 1% of gross salary. These payments go to Egypt’s National Authority for Social Insurance (NASI) and must be submitted monthly.
What payroll taxes do employees pay in Egypt?
Employees contribute the following from their salaries:
Social Insurance: 11% of gross salary.
Income Tax (Progressive): 0%–25%, depending on income level. The EOR deducts and pays these amounts to Egypt’s tax authorities on behalf of the employee.
What is the difference between a direct employer and an Employer of Record in Egypt?
A direct employer must set up a legal entity, register with Egypt’s labor and tax authorities, and manage payroll and compliance directly. An Employer of Record (EOR) legally employs your staff on your behalf, handling all local registrations, payroll taxes, and statutory benefits, while you manage the employee’s day-to-day work and performance.
Are there regional or municipal payroll taxes in Egypt?
No. Payroll taxes and social contributions are administered at the national level. Employers and EOR providers only need to comply with the Egyptian Tax Authority (ETA) and NASI regulations.
Which payroll taxes must an EOR withhold in Egypt?
An EOR in Egypt withholds and remits:
Income tax (based on progressive brackets)
Employee’s 11% social insurance contribution
Employer’s 18.75% social insurance contribution
Health and unemployment insurance payments This ensures full compliance with Egyptian labor and tax laws.
How does an EOR calculate employer contributions in Egypt?
Employer contributions are calculated as fixed percentages of each employee’s gross monthly salary, based on government-defined thresholds. The EOR uses the latest tax tables to ensure all calculations align with current regulations.