In a move designed to unlock the potential of Egypt’s micro and small enterprises, the Egyptian Tax Authority (ETA) has introduced a landmark package of tax facilities aimed at promoting business growth, easing formalization, and expanding financial inclusion across the country’s informal economy.
ETA Chairperson, Rasha Abdel Aal, announced this week that the new measures, enacted under Law No. 6 of 2025, offer simplified tax structures and forgiveness provisions tailored specifically to microbusinesses and self-employed professionals with annual revenues under EGP 20 million.
A Simpler Path for Small Businesses
The new tax system introduces proportional rates based on turnover, starting at just 0.4% for enterprises earning below EGP 500,000 annually, and rising to a maximum of 1.5% for those just under the EGP 20 million ceiling. In a significant incentive, businesses registering under the new regime will be exempt from tax audits for a full five years.
The policy also includes full waivers of past tax liabilities and penalties, a move that officials have described as a “fresh start” for informal and semi-formal businesses hesitant to enter the official financial system due to prior obligations or bureaucratic hurdles.
Eligible professions include a wide spectrum of Egypt’s informal and semi-formal workforce: freelancers, doctors, engineers, craftsmen, lawyers, artists, and small-scale entrepreneurs across diverse sectors.
Digital Transformation at the Core
The initiative is part of a broader reform strategy that has been underway since 2018. Mohsen El-Gayar, General Manager of Customer Service for the Canal Cities region, emphasized the sweeping digital transformation of the Egyptian Tax Authority. Key developments include electronic filing, a central tax management system known as SAB, e-invoicing, e-receipt platforms, and standardized payroll systems — all aimed at increasing transparency and improving taxpayer experience.
“These reforms have enabled real-time support, reduced paperwork, and created a more service-oriented tax administration,” El-Gayar said.
Dispute Resolution and Voluntary Compliance
Alongside the new small enterprise package, Egypt has enacted Law No. 5 of 2025, a limited-time offer for taxpayers to resolve long-standing disputes. The law, effective until August 12, allows individuals and businesses to amend or submit tax returns for the 2020–2024 period without incurring penalties — an effort to reduce legal backlogs and encourage voluntary compliance.
Ragab Mahrous, advisor to the ETA chair, said during a recent outreach campaign that the reforms reflect a new era of partnership between the state and taxpayers.
“This is not simply a tax initiative. It is a national effort to rebuild trust, encourage entrepreneurship, and create a more inclusive economic environment.”
A Catalyst for Economic Inclusion
With nearly 60% of Egypt’s labor force operating in the informal sector, the new policies aim to bring millions of workers and small businesses into the formal economy — a critical step in broadening the national tax base and fostering long-term economic resilience.
