How to Close the Year-End Payroll Without Missing Any Variables

In Egypt, year end payroll closing is where small misses turn into big January cleanup. You might run December payroll and think you are done. Then January hits. A tax reconciliation line does not match, a social insurance base looks off, or a one off payment is sitting in the wrong month. Now your team is fixing payroll logic while also trying to file, reconcile, and close books.

This matters more in 2025 because payroll inputs changed during the year. The private sector minimum wage moved in March. A new Labor Law became effective in September, and it introduced new items that touch payroll calculations and documentation. Annual salary tax reconciliation work also sits inside January, which means your year end numbers get tested fast. 

This guide covers the payroll variables to check before closing 2025.

Why Year-End Payroll Closing Is Critical in Egypt 

“Year end payroll closing” in Egypt is not a checkbox. It is the moment you lock the payroll numbers that flow into tax and insurance processes that start testing you in January.

Start with salary tax. Employers generally withhold salary tax and remit it on a monthly basis. KPMG frames the remittance timing as within the first 15 days of the following month. That cadence creates a rhythm. If December payroll is wrong, you feel it quickly because your monthly cycle continues, and your annual reconciliation work begins. 

Then comes the annual salary tax reconciliation. KPMG explicitly notes that, at year end, the employer prepares an annual reconciliation of salary tax and remits differences, if any, within January of the following year. PwC also points to an annual tax reconciliation submitted at the start of the year showing annual salaries and wages per employee. So January is not “quiet admin time”. It is the month your 2025 payroll story gets audited by your own filings.

Now add the 2025 risk layer.

1. Minimum wage changed mid year. Egypt’s National Wages Council decided to raise the private sector minimum wage to EGP 7,000 effective March 1, 2025. The same announcement also referenced a periodic allowance set at a minimum of 3% of the insurance subscription wage and not less than EGP 250 per month. If your payroll logic did not reflect the change cleanly from March onward, you can end up with mismatched bases between payroll registers, HR letters, and insurance reporting. 
2. Labor Law 14 of 2025 became effective September 1, 2025. EY highlights payroll relevant changes. These include a training fund contribution and a statutory annual salary increment tied to the social insured salary. These are not “HR only” changes. They create new payroll variables and new proof requirements.
3. Social insurance caps move over time. Public announcements for 2026 point to an increase effective January 1, 2026 from EGP 2,300 minimum and EGP 14,500 maximum to higher limits. That means 2025 used the limits that applied before the 2026 increase. If you accidentally apply the wrong period’s cap, your contribution base will be wrong, even if your rates are right. 

So if you want to close payroll 2025 Egypt without January fixes, treat year end payroll closing as reconciliation work, not payroll processing.

The 12-Point Year-End Payroll Closing Checklist 

Below is an annual payroll closing checklist built for finance and payroll teams. Each point tells you what to check, where teams usually fail, and what document proves it.

1) Bonuses and one off payments recorded correctly in 2025

What to check: Confirm every bonus, incentive, signing bonus, retention payout, and exceptional allowance is recorded in the correct pay period and correct year. Recheck anything paid late in December or early in January but earned in 2025.

Where teams fail: They rely on bank transfer dates, not payroll earning dates. Or they book one off payments through AP, then forget to mirror them in payroll.

Proof: Approved bonus sheets, payroll change approvals, and the payroll register for the month the amount was processed.

2) Overtime reconciliation and correct rate application

What to check: Reconcile approved overtime hours to paid overtime. Confirm rate rules match your policy and the minimum legal premiums. Al Tamimi notes minimum overtime premiums of 35% for daytime overtime and 70% for nighttime overtime under Egyptian labor rules. 

Where teams fail: They apply a flat rate for all overtime. They misclassify night shifts. They pay overtime but keep no approval trail.

Proof: Timesheets, manager approvals, attendance logs, and the overtime calculation sheet used by payroll.

3) Allowances mapped correctly for tax and social insurance logic

What to check: List every allowance. Transportation, meal, shift, site, hazard, phone, housing. Decide how it is treated in payroll. Then confirm your payroll system maps it consistently across months.

Where teams fail: They copy an allowance setup from an old template and never revisit it. Or HR adds “temporary allowances” mid year without telling payroll how to classify them.

Proof: Compensation structure letters, payroll earning codes mapping, and the monthly payroll register.

Note: If you do not have a primary source for any specific exemption percentage, do not assume it. Confirm insurability and tax treatment with your payroll advisor.

4) Profit sharing accrual and timing

What to check: If your company type falls under profit sharing requirements, confirm you accrued it and documented the basis. Law 159 of 1981 states employees are entitled to a share of distributable profits. It also states this share shall not be less than 10% and shall not exceed total annual wages. 

Where teams fail: They treat profit share as optional. Or they decide it late and cannot tie it cleanly to finance statements and payroll records.

Proof: Board or general assembly resolution, audited financial statements, and the profit share distribution schedule.

5) Social insurance wage limits and annual adjustments

What to check: Confirm the cap period you applied for 2025. Deloitte’s summary shows the wage cap for social security from January 1, 2025 as EGP 2,300 minimum and EGP 14,500 maximum. Then public announcements for 2026 show increases effective January 1, 2026. So 2025 closing needs the “before the 2026 increase” limits, month by month. 

Where teams fail: They apply the new cap early. Or they apply the cap to the wrong base element inside the payroll system.

Proof: Social insurance reporting extracts, the cap table you used in payroll, and any official circular your team relied on.

6) Training fund contribution for Sep to Dec 2025

What to check: Labor Law 14 of 2025 introduced a training fund contribution. EY describes it as 0.25% of the minimum social insured salary per employee, with a minimum of EGP 10 and a maximum of EGP 30. Andersen’s translation of the law includes the 0.25% contribution language. 

Where teams fail: They miss it completely in 2025 because it started in September. Or they do not know whether it is paid monthly or annually in their implementation, so it sits in limbo.

Proof: Payroll configuration note, calculation sheet for Sep to Dec, and payment evidence if already remitted.

7) Statutory annual salary increment check

What to check: EY notes employers are required to provide an annual salary increment with at least 3% of the social insured salary, with provisions for temporary exemptions for eligible cases. Validate whether your 2025 increment policy aligns, and document any exception handling.

Where teams fail: They give raises, but they do not tie them to the required base or document the logic.

Proof: Raise letters, payroll change approvals, and the insured salary base used for the 3% calculation.

8) Annual leave balance accrual and financial liability

What to check: Confirm leave accrual rules, balances, and any payout policy. EY’s summary includes annual leave entitlement structure, starting at 15 working days in the first year, then 21, then 30 after 10 years, plus special cases. Your closing needs clean balances and a clear liability view. 

Where teams fail: Leave sits in HR files, not in payroll logic. Then the company discovers payouts or carryover issues during audits or terminations.

Proof: Leave tracker export, HR approvals, and the policy document that explains carryover and payout.

9) Salary advances reconciliation and final payroll netting

What to check: Reconcile every outstanding advance. Confirm remaining balances and netting rules in the final payroll of the year.

Where teams fail: Advances are tracked in WhatsApp threads or paper notes. Then deductions become inconsistent and employees dispute net pay.

Proof: Signed advance requests, repayment schedules, and the deduction ledger.

This is where a structured solution like dopay EarlyPay reduces the chaos of ad hoc advances.

10) New hire and termination final settlements, pro rating, enrollment dates alignment

What to check: For every hire and exit in 2025, validate start dates, stop dates, pro rated salary, allowances, deductions, and enrollment dates for insurance reporting.

Where teams fail: HR updates late. Payroll runs on outdated dates. Social insurance enrollment dates do not match payroll.

Proof: Employment contracts, HR onboarding and offboarding forms, and final settlement sheets.

Note: Avoid legal certainty on every entitlement unless you have a legal source. Treat this as coordination items to confirm with HR and legal.

11) Foreign employee checks

What to check: Confirm residency, work permit validity, withholding profile, and whether the employee is included in any insurance scheme that applies. EY notes non national employees are not permitted to work before obtaining a license from the relevant ministry.

Where teams fail: They treat foreign payroll as “same as everyone”. Or they set withholding once and never revisit.

Proof: Work permits, residency documents, and the withholding setup sheet approved by tax and payroll.

12) Documentation tie out, payroll register vs tax forms vs social insurance statements

What to check: Tie payroll totals to what you filed. Your payroll register, Form 4 submissions, annual reconciliation pack, and social insurance statements should tell one story. PwC’s note on Ministerial Decree 144 of 2020 states Form 4 payroll and annual payroll reconciliations are submitted through the ETA online portal. The ETA also maintains a payroll forms page as part of its system artifacts. 

Where teams fail: They keep separate “finance numbers” and “tax numbers”. Then January becomes a reconciliation fight.

Proof: Final payroll registers, Form 4 acknowledgment receipts, and insurance reporting extracts.

The Month-by-Month Review Process 

If you want a clean year end, you need a month by month review. This is where most teams fail because they only look at Q4. For payroll audit process, you need a simple variance sheet that covers all months of 2025.

Step 1. Build a 12 month payroll summary.

For each month, capture headcount, gross pay, taxable pay base, social insurance base, overtime totals, bonus totals, and total deductions.

Step 2. Mark the “change months”.

In 2025, two dates matter even if your business did not change anything else.

• March 1, 2025: Private sector minimum wage moved to EGP 7,000, with related periodic allowance details announced by the National Wages Council. Ministry of International Cooperation
• September 1, 2025: Labor Law 14 of 2025 became effective, and it introduced payroll relevant changes like the training fund contribution and the statutory annual salary increment requirement. 

Step 3. Run variance tests.

Look for spikes that do not match business reality. Example: overtime jumps but attendance did not. Allowances increase but HR did not approve. Taxable base drops but there was no change in policy.

Step 4. Do a tie out for each month.

Match payroll register totals to bank payment totals. Match tax withheld totals to what was remitted. Match insurance base totals to your reporting.

Step 5. Freeze a closing pack.

Once variances are explained and corrected, lock the month. Save the final register, approvals, and supporting sheets in one folder per month. This makes January work faster because you are not rebuilding history while trying to reconcile.

This is how you keep monthly payroll review Egypt practical. You reduce the number of “mystery differences” that surface in January.

Documentation You Must Have Ready 

Year end payroll closing becomes painful when documentation is scattered. Your goal is a closing pack that answers one question fast. “Why is this number what it is”.

1) Salary tax documentation

KPMG notes employers generally withhold salary tax monthly and remit it within the first 15 days of the following month. KPMG also notes annual salary tax reconciliation work and remitting differences within January of the following year. 

You also need proof that Form 4 exists in the Egyptian Tax Authority ecosystem. The ETA maintains a payroll forms page as a reference point for payroll tax system forms. PwC’s note on Ministerial Decree 144 of 2020 states Form 4 payroll and annual payroll reconciliations are submitted through the ETA online portal. 

2) Payroll registers and approvals

Keep the final payroll register per month. Add the approval chain. HR change approvals. payroll sign off. finance sign off.

3) Timesheets and overtime approvals

Since overtime disputes usually come from missing proof, keep attendance exports and manager approvals attached to the overtime calculation file. 

4) Leave records

Keep leave balances, approvals, and the policy that explains accrual and carryover rules. 

5) Advances and deductions

Keep signed advance agreements and a deduction ledger that shows opening balance, deductions, and closing balance.

6) Employee file retention

EY notes a retention requirement extended to five years following the termination date of the employee. So your closing pack is not just for January. It needs to survive audits, disputes, and inspections. 

Common Year-End Payroll Mistakes to Avoid 

These are the mistakes that trigger January panic, and they are avoidable.

Forgetting the September 2025 changes.

Teams keep running payroll as if the new law did not happen. Then they discover missing items like training fund contribution logic or missing documentation for statutory increment handling. 

Missing the training fund contribution.

Because it starts late in the year, it is easy to miss. If you did not calculate Sep to Dec properly, you end up correcting across months during closing. 

Using the wrong insurable wage limit period.

2026 announcements clearly frame an increase effective January 1, 2026 from the prior limits. That implies 2025 reporting should use the limits that applied before the 2026 increase. Applying the wrong cap can break your social insurance reporting even if your payroll “looks normal”. 

Overtime rate errors.

Al Tamimi highlights minimum overtime premiums of 35% for daytime and 70% for nighttime. Misapplying these, or failing to document approvals, creates disputes and adjustments. 

Profit sharing not accrued or documented.

If profit sharing applies to your company type, it needs an accrual view and a documented method. Law 159 sets the minimum and cap language, so treating it as optional creates risk and messy back and forth at year end. 

The Digital Advantage for Year-End Closing 

Digital payroll Egypt is not about “being modern”. It is about making year end closing repeatable.

A good payroll system should do a few unglamorous things well.

• Keep a change log. Every rate update, cap update, earning code change, and employee data change should be traceable.
• Keep an audit trail. Approvals, imports, exports, and corrections should leave evidence.
• Generate reconciliation outputs fast. Monthly registers, overtime summaries, tax withheld totals, and social insurance base totals should be exportable in minutes.
• Reduce manual dependence. If one person holds the only “real tracker” in Excel, you do not have a system. You have a single point of failure.

This is the logic behind automated payroll closing. You do less detective work in January because the story is already structured.

If you want to make year end closing easier next year, build your process around infrastructure. dopay sits in that infrastructure layer for payroll, with room to connect to pages like the dopay payroll platform page and the EarlyPay page, plus related reading like “Why salary advances peak in December” and “The legal setup checklist before hiring your first employee”.

Timeline: When to Start Closing 2025 Payroll 

If you start closing in late December, you are late. A realistic year-end payroll timeline looks like this.

Mid November to early December

Build your month by month variance sheet. Identify high risk items. overtime. bonuses. allowances mapping. insurance base. advances. This gives you time to fix issues before the year ends.

Mid December

Run a preliminary reconciliation. Compare year to date payroll totals to what you expect based on headcount and compensation structure. Flag mismatches early.

Late December

Freeze payroll variable inputs. No informal changes. No “we will fix it next month”. December is where you lock the year.

January to mid January

Finalize reconciliation packs and prepare for the annual salary tax reconciliation work that sits within January. KPMG explicitly references remitting any salary tax reconciliation differences within January of the following year, which is why your year end needs to be clean before you walk into January.

A practical target is to start mid November and finish by mid January. That schedule gives you time to correct without rushing filings.

Conclusion

Closing 2025 payroll is not one task. It is a checklist, a month by month review, and a documentation package that holds up under January pressure.

If you do only one thing, do this. Stop treating payroll as “payments”. Treat it as controlled data that feeds tax forms, social insurance reporting, and employee trust.

Use the 12 point checklist to catch the variables that usually get missed. Then run the month by month variance sheet so you can prove why your numbers make sense. Finally, build a single foldered closing pack that includes registers, approvals, timesheets, leave, advances, and filing proofs.

If you want to make this repeatable in 2026, move away from scattered trackers and manual fixes. dopay can help as the payroll infrastructure layer that keeps audit trails, exports, and reconciliation ready when you need them.

FAQs (4 to 6 Questions)

1) When should I start closing 2025 payroll in Egypt?

Start mid November. Aim to finish by mid January, since annual salary tax reconciliation differences are handled within January in common compliance guidance.

2) What are the most commonly missed payroll variables at year end?

Training fund contribution from Sep to Dec 2025, statutory annual increment checks, overtime rate application, profit sharing accrual, and using the correct social insurance cap period. 

3) Do I need to include bonuses in salary tax reconciliation?

In most setups, bonuses form part of annual taxable employment income. Confirm the exact treatment and timing with your tax advisor, especially for one off payments processed around year end.

4) How do I calculate profit sharing for employees?

Start from your distributable profits, then apply the company’s approved distribution method. Law 159 states the employee share shall not be less than 10% and shall not exceed total annual wages. Confirm your specific company’s rules and resolutions with your advisor. 

5) What changed in 2025 that impacts payroll closing?

Private sector minimum wage moved to EGP 7,000 effective March 1, 2025. Labor Law 14 of 2025 became effective September 1, 2025, and it introduced the training fund contribution and the statutory annual salary increment requirement. 

6) Do I need a consultant for year end payroll closing?

Use a simple test. If you have multiple sites, variable pay, high turnover, foreign employees, or manual payroll workflows, external review usually pays for itself. If payroll is stable, centralized, and systemized with clean documentation, you can often close internally.