SalaryEG
العربيةLog inGet started

Payroll Guides › Salary income tax

Annual salary tax settlement in Egypt: the year-end reconciliation, Form 4 and deadlines

What Egyptian employers file for salary tax: monthly payment by the 15th, the quarterly Form 4 declaration, the annual settlement due by 31 January, and the penalties for missing them.

Last reviewed: 30 Oct 2026 · Laws covered: Income Tax Law 91/2005 · Unified Tax Procedures Law 206/2020 · Law 7/2025

Every employer in Egypt that withholds salary tax has three recurring duties: pay the withheld tax to the Egyptian Tax Authority (ETA) monthly, file a quarterly declaration on Form 4 (نموذج 4 مرتبات), and, by the end of January, file an annual settlement that recalculates each employee's tax for the whole year and pays or recovers the difference. The annual settlement is where bonuses, mid-year raises, joiners and leavers are trued up, so the total tax for the year matches what the law actually requires.

The three filings at a glance

FilingWhat it isWhenLegal basis
Monthly paymentPay the salary tax withheld in the month to the ETAWithin the first 15 days of the following monthArticle 14, Law 91/2005
Quarterly declaration (Form 4)Declaration of salaries paid and tax withheld in the quarter, employee by employee, filed electronically through the ETA's unified payroll systemIn January, April, July and October for the previous quarter (the ETA treats the end of that month as the deadline)Unified Tax Procedures Law 206/2020
Annual settlement (Form 6 for the private sector)Year-end recalculation of every employee's annual tax, with the difference paid or refundedBy 31 January of the following yearLaw 206/2020 and ETA annual notices

Public-sector bodies use Form 7 and civil-service bodies Form 8 for the annual settlement; private companies use Form 6. All of these are now submitted through the ETA's electronic system for "unifying the bases and standards of calculating salary tax" (منظومة توحيد أسس ومعايير احتساب ضريبة الأجور والمرتبات), which replaced paper forms.

Why a settlement is needed

Monthly withholding is an estimate: each month the employer annualises that month's pay and withholds one-twelfth of the resulting annual tax. The estimate drifts whenever pay is not flat:

  • A bonus paid in one month is taxed at that month's annualised rate, which may be too high or too low.
  • A raise in, say, June means the first five months were withheld at a lower run-rate than the year's actual total requires.
  • A joiner in September has had only four months of withholding but is entitled to the full EGP 20,000 exemption and the full 0% band for the year.
  • A leaver's final month may include leave encashment and other lump sums.

The annual settlement replaces all these estimates with one calculation: actual annual taxable pay, less actual employee social insurance, less EGP 20,000, rounded down to EGP 10, through the brackets. The result is compared with the tax actually withheld and remitted during the year.

  • If the settlement shows more tax is due, the employer pays the difference to the ETA and is entitled to recover it from the employee (in practice by deducting it from January or February pay).
  • If less tax is due, the employer refunds the employee and offsets the amount against its next salary tax payment.

Worked example

An employee earns EGP 15,000 a month (basic plus 30% allowances, insurance on the basic). Monthly withholding all year is EGP 1,558.50, so EGP 18,702 was remitted. In December the company paid a one-off bonus of EGP 20,000.

Annual settlement:

  • Actual annual taxable pay: 180,000 + 20,000 = EGP 200,000.
  • Employee social insurance for the year: EGP 15,230.76.
  • Net taxable income: 200,000 − 15,230.76 − 20,000 = 164,769.24, rounded down to EGP 164,760.
  • Tax: 0% on 40,000; 10% on 15,000 = 1,500; 15% on 15,000 = 2,250; 20% on 94,760 = 18,952. Annual tax EGP 22,702.
  • Already withheld: EGP 18,702. Difference due: EGP 4,000.

The whole bonus fell in the 20% band, so the settlement adds exactly 20% × 20,000 = EGP 4,000. If payroll had taxed the bonus in December at the employee's marginal rate (as many systems do), the settlement difference would already be nil.

Try it in the calculator

What the settlement must contain

For each employee the electronic settlement carries the name, national ID (or passport number for foreigners), tax file reference where relevant, total annual pay, exempt amounts, social insurance deducted, net taxable income, annual tax due, tax withheld, and the difference. The employer also attaches the totals for the year and any corrections to earlier quarterly declarations.

The settlement covers everyone paid during the year, including employees who left. For leavers the employer still owes the ETA the correct annual tax; any shortfall it cannot recover from the former employee is a cost the employer bears, which is why running the settlement calculation on the final payslip is good practice.

Penalties

Under the Unified Tax Procedures Law 206/2020 (as amended by Law 211/2020 and Law 7/2025):

  • Late payment of withheld tax: delay interest at the Central Bank of Egypt's credit and discount rate plus 2% a year, from the day after the deadline. Since Law 7/2025 the total of additional tax and delay interest is capped at 100% of the original tax.
  • Failure to file the quarterly salary declaration on time: a fine of EGP 3,000 to EGP 50,000 if filed within 60 days of the deadline, and a much higher range (reported as up to EGP 2 million under Law 211/2020) if later than 60 days.
  • Not withholding at all: the employer is jointly liable for the tax it should have withheld, plus delay interest, under Article 110 of Law 91/2005 and Law 206/2020.
  • Tax return differences (Article 87 bis): additional tax of 20% to 80% of the difference depending on its size, where the declared tax is below the final assessed tax.

Figures and ranges change with each amendment; check the current penalty schedule with an adviser before relying on them.

Common mistakes

  • Treating Form 4 as the settlement. Form 4 reports what was withheld each quarter; it does not recalculate anything. Only the January settlement does.
  • Forgetting leavers. Everyone paid during the year goes into the settlement, not just the December headcount.
  • Settling on the December run-rate. The settlement uses actual annual pay, not December × 12.
  • Missing the January window. The settlement for the year ending 31 December is due by 31 January, three weeks after the December payment deadline. Start in December.
  • Not refunding over-withheld tax. Where the settlement shows a refund, the employee is entitled to it; the employer offsets it against its next remittance.

FAQ

Who files the annual settlement, the employer or the employee?

The employer, for all its employees. An employee files their own annual return only if they have other income (business, professional or rental income) or salary from more than one employer that needs reconciling.

Is the deadline really the end of January?

Yes. The ETA has announced 31 January as the deadline for the annual salary settlement in each recent year, and advisers' 2026 tax calendars list it the same way. Watch for an ETA notice each January in case it grants an extension.

Do small businesses have a simpler regime?

Law 6/2025 lets enterprises with annual turnover up to EGP 20 million opt into a simplified regime, one feature of which is a single annual salary tax return instead of quarterly filings. The monthly withholding and payment obligations remain.

What if we discover an error from a previous quarter?

File an amended Form 4 for that quarter through the electronic system and reflect the correction in the annual settlement. Voluntary correction before an audit generally avoids the Article 87 bis additional tax.

Sources

General information, not legal or tax advice. Rules change; check the official sources and your adviser for your situation.