The Egyptian Ministry of Manpower is looking at how to apply a tax of 1% of the net profits of companies subject to labor law, in favor of the ministry's training and rehabilitation funding fund.
The decision of the Training and Rehabilitation Funding Fund, published in the Official Gazette, stipulated that "ministry inspectors inform companies with 10 or more employees that they have one month to pay the tax".
However, the tax may not apply if MPs rush to approve labor law amendments, which provide for a tax in favour of the fund up to a maximum of £50 per employee, a reasonable percentage compared to that tax, according to Enterprise.
The proposed tax will be applied in accordance with article 134 of the current Labour Code of 2003, as companies with at least 10 employees must pay 1% of their net profits to the Ministry for their training and rehabilitation funding fund.
The fund will use the proceeds to fund job skills training programmes and training centres across the country.
This tax has been in dispute before the Supreme Constitutional Court since at least 2009 and, as such, has been suspended.
ExxonMobil sued the government demanding that the article be repealed, alleging that it was unconstitutional.
The ministry's latest decision comes after the court ruled in favor of the government in March, ruling on the constitutionality of article 134 of the law.
According to the court's ruling, companies subject to labor law must by the time the government ends the fiscal year budget next month. This would explain the one-month timetable mentioned in the Official Gazette.
A government source said, "Don't panic. No decision has been made yet. The mechanism for implementing this resolution has not yet been united."
In his remarks to Enterprise, the source said that workforce advisers are currently working on mechanisms for the application of the substance.
It remains unclear whether the tax will be applied retroactively. "This point is still unclear and will require further readings and guidance from relevant government agencies," an informed source said. A senior adviser to the National Wage Council also ruled out retroactive application of the resolution.
The new labour law is still under discussion in the House of Representatives.
The new Labour Code abolishes this tax and under Article 19 the 1% tax will be replaced by a monthly tax of 0.25% on wages covered by social insurance, with the tax per employee not exceeding 50 pounds and not less than 5 pounds. If the company has 100 employees subject to social insurance, the maximum you will pay to the ministry's training and rehabilitation fund under the new labor law is EGP 5,000.