Egypt: a defining shift in tax policy and business environment
- 13 hours ago
- 3 min read
Egypt Tax Update – Second Facilitation Package
Executive Summary
• Introduction of 33 measures focused on incentives and simplification
• Low-cost financing and simplified systems for SMEs and new entrants
• Extension of dispute settlement until December 31, 2026
• Faster VAT refunds and improved liquidity measures
• Relief on dividends taxation and capital market incentives
• Expansion of digital tax systems and services
• Introduction of a temporary tax card for faster business setup
• Reduction of VAT on medical devices to 5%
• Fixed 2.5% real estate tax with digital processes
• Elimination of estimated taxation going forward
A clear shift toward a more structured, transparent, and business-aligned tax system.
Introduction
The Ministry of Finance has introduced a second package of tax facilitations following more than 40 consultation sessions with the tax community, this package includes 33 legislative and executive measures, all focused on incentives, exemptions, and procedural simplification for compliant taxpayers.
A More Structured, Incentive-Driven Tax System
The direction of reform is becoming increasingly clear:
• Incentives and priority access to services through the white list and Distinction Card
• Strengthening voluntary compliance through incentive-based mechanisms
• Linking tax registration with electronic systems
• Requiring tax registration for government transactions
• Phasing out estimated taxation for future periods
This reflects a broader shift toward a system where compliance directly influences both access and operational efficiency.
Supporting Business Growth and Market Entry
Key measures aimed at facilitating growth include:
• Low-cost financing for the first 100,000 taxpayers joining the simplified integrated system
• Introduction of a temporary tax card to accelerate company formation and licensing
• Allowing fiscal years 2023 and 2024 to benefit from fixed and proportional tax systems
• Integrating informal economic activities into the formal tax framework
These developments position tax registration as a practical enabler of business expansion.
Improving Liquidity and Cash Flow
Several measures directly support business liquidity:
• Restructuring VAT refund processes, including immediate refunds for White list taxpayers
• EGP 7.2 billion refunded with 151% growth, with plans to expand further
• Ability to offset receivables and payables
• Right to recover credit balances from income tax returns
• Increased limits on deductible financing costs
• Exemption of foreign loan interest for national projects
In addition, VAT on medical devices has been reduced from 14% to 5%, supporting investment in the healthcare sector.
Enhancing Investment Environment and Corporate Structuring
Reforms also improve clarity for investors and corporate groups:
• Elimination of double taxation on dividends between parent and subsidiary companies
• Exemption of dividends received by holding companies under specific conditions
• Application of stamp duty on listed securities instead of capital gains tax
• Definition of cost base for unlisted shares
• Tax incentives for listing companies for a period of three years
These measures are expected to reduce uncertainty and support investment activity.
Dispute Resolution and Governance Enhancements
To address existing tax exposures:
• Extension of the Tax Dispute Settlement Law until December 31, 2026
• Establishment of a permanent committee for transfer pricing appeals
• Issuance of unified guidance on administrative seizure procedures
This introduces clearer and more structured pathways for managing disputes and enforcement.
Digital Transformation of Tax Administration
The system continues to move toward digital integration:
• Launch of an electronic consultation platform
• Digital system for company liquidation and closure
• Delegation of certain services to E-Tax
• Mobile application for real estate tax notification and payment
• Full integration between tax registration and electronic systems
• Enabling taxpayers to document costs digitally
Additional Structural Measures
Further updates include:
• Establishment of specialized tax service centers in New Cairo, Sheikh Zayed, and New Alamein
• Issuance of guidance for exported services
• Fixed 2.5% real estate disposal tax, with exemptions for family transfers
Our Perspective
These developments signal a clear shift toward a more structured, transparent, and business-aligned tax system.
For business leaders, the focus extends beyond understanding the changes to proactively positioning within this evolving framework.
At Kozman & Co., we view this as part of a broader transformation, one that places greater emphasis on compliance quality, operational alignment, and disciplined tax management.
For businesses, this brings both opportunity and responsibility, requiring a more strategic and well-managed approach to tax.
Contact Us
For further insights or support in navigating these developments, please contact us:
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