Egypt is preparing to officially launch a second package of tax incentives in the coming days, signaling a renewed push by the Ministry of Finance to strengthen trust with the business community, expand the formal economy, and enhance transparency between the state and the private sector.
The announcement was made by Rasha Abdel Aal, Head of the Egyptian Tax Authority (ETA), during a meeting with members of the Egyptian-Belgian Business Association, following the completion of community dialogue on the proposed measures.
Building Trust With the Business Community
Abdel Aal said the new incentives align with Finance Minister Ahmed Kouchouk’s strategy of maintaining continuous dialogue with civil society and business organizations to better understand their needs and remove obstacles facing investors.
“This approach reflects the ministry’s commitment to partnership, transparency, and integration between the state and the business community,” she said, emphasizing that restoring confidence is central to Egypt’s broader fiscal reform agenda.
She noted that the first package of tax incentives had already delivered “tangible results,” particularly in increasing voluntary tax compliance, and marked a turning point in addressing long-standing structural challenges within the tax system.
Support for Small and Medium Enterprises
Abdel Aal highlighted the advantages of Law No. 6 of 2025, which applies to enterprises with annual revenues not exceeding EGP 20 million. The law introduces a graduated tax system, with rates starting at 0.4% and capped at 1.5%, aiming to reassure taxpayers and encourage businesses to join the formal economy.
“The objective is to widen the tax base without placing excessive burdens on small and medium-sized enterprises,” she said.
What’s in the Second Package?
According to Abdel Aal, the second package includes 26 measures, with a strong focus on supporting compliant taxpayers. Key elements include:
- Faster VAT refunds and simplified procedures
- The upcoming launch of a “Tax Excellence Card”, granting compliant taxpayers fast-track services and access to advance rulings and investor support units
- Expanded use of digital platforms to streamline tax administration
As part of Egypt’s digital transformation, the ETA is also launching a mobile application for real estate transaction tax, allowing individuals to declare property disposals, pay the 2.5% tax electronically, and obtain tax clearance with ease.
In addition, a new electronic consultation platform will allow businesses to review and comment on draft tax laws and regulations before they are issued—an unprecedented step toward participatory policymaking.
Structural and Administrative Reforms
The package also includes upgrades to the central clearing system, enabling electronic offsetting between taxpayers’ credit and debit balances. The authority has issued a comprehensive guideline on the tax treatment of exported services, aligned with international standards.
Further reforms include separating commercial audits from transfer pricing audits, introducing a new phase for reviewing taxpayer appeals, and strengthening procedural safeguards.
VAT Amendments to Support Healthcare and Transit Trade
On the legislative front, Abdel Aal revealed proposed amendments to the Value Added Tax (VAT) Law designed to support the healthcare sector and stimulate transit trade. These include:
- Reducing VAT on medical devices to 5% from 14%
- Exempting dialysis supplies and equipment, including filters and components, from VAT
- Applying the standard 14% VAT rate on household detergents, allowing manufacturers to fully deduct input costs
To further promote Egypt as a regional logistics hub, services provided to goods in transit will not be subject to VAT, provided they remain under customs supervision in line with customs law.
Expanding Tax Service Centers
Abdel Aal also announced plans to expand tax service centers, with three new fully digital facilities set to open in New Cairo, New Alamein, and Sheikh Zayed City, aimed at improving service quality and accessibility for taxpayers.
She concluded by affirming the continued work of joint committees tasked with resolving tax-related disputes promptly. During the meeting, all inquiries from Egyptian-Belgian Business Association members were addressed, a move she said reinforces mutual trust between the government and investors.
The second package of tax incentives is widely seen as a critical step in Egypt’s efforts to modernize its tax system, attract investment, and create a more predictable and business-friendly fiscal environment.
