In the past, only Egyptian nationals were required to contribute to Social Insurance and Pension schemes in Egypt. Non-Egyptian employees were exempt from mandatory participation.
Changes to Social Security
In 2021, Egyptian authorities enacted a change that expanded the scope of participation to also include foreign nationals in the social security scheme. The Egyptian Prime Minister issued Decree # 2437 in September approving regulations making this expanded scope effective as of September 29, 2021. With this change, all foreign national employees working in Egypt (with limited exceptions below) are now required to participate in the Egyptian Social Security scheme. Compulsory contributions from both the employer and employee will now be required. Currently, the contribution rates for 2022 in Egypt for employees is 11.5% capped at EGP 12,408, and for employers is 18.75% capped at EGP 21,150.
Totalization Agreement
Foreign national employees can avoid contributing to Egyptian social security if they contribute to social security in their home country and hold an approved certificate of coverage from one of the five countries that has a social security treaty in force (known as a totalization agreement) with Egypt. The countries that have an in-force totalization agreement with Egypt are Cyprus, France, Greece, Morocco, and the Netherlands.
Tax Planning
We encourage you to review your social security arrangements for employees inbound to Egypt to ensure you are meeting the new social security compliance requirements and updating your cost accruals for these additional costs which could be up to EGP 33,558 per year. Consider any tax planning opportunities if certificates of coverage can still be obtained to avoid these costs.
