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27 February 2025

Egypt introduces new legislation to facilitate tax settlements

  • The Egyptian Parliament has enacted a package of tax laws, including Law No. 7 of 2025, which introduces amendments to the Unified Tax Procedures Law No. 206 of 2020.
  • Law No. 7 of 2025 introduces a cap to late-payment fees or additional taxes, while also providing a framework for penalties to settle tax crimes, and sanctions cases that do not involve tax obligations and withholding tax violation settlements.
  • Taxpayers should evaluate the provisions of Law No. 7 of 2025 and assess the relevant tax updates that may affect their business.
 

Executive summary

On 12 February 2025, the Egyptian Parliament enacted Law No. 7 of 2025 (Law No. 7), amending specific provisions of the Unified Tax Procedures Law No. 206 of 2020 (Law No. 206). Law No. 7 is part of a comprehensive package of laws published in the Official Gazette in February 2025.

Law No. 7, effective from 13 February 2025, modifies Law No. 206 by capping late-payment penalties and enabling settlements for certain tax violations.

Detailed discussion

Background

Law No. 206 was published on 19 October 2020, establishing unified tax procedures for the assessment and collection of various taxes. Law No. 206 aimed to standardize procedures across similar tax categories and create a legal framework for transitioning to a new tax e-system aligning with the digital economy.

Law No. 7 of 2025 introduces amendments to Law No. 206 in line with the government's aim to promote a more compliant and vibrant business tax landscape, encouraging economic growth in Egypt.

Key elements of Law No. 7

Law No. 7 adds the following new provisions to Law No. 206.

Cap on late-payment penalties: Late-payment fines or additional taxes shall not exceed 100% of the original tax due.

Settlement procedures for tax crimes and sanctions: Law No. 7 authorizes the Minister of Finance or a delegate to settle tax crimes and sanctions outlined in the Egyptian tax laws where no taxes are due (e.g., nil value-added tax returns), in exchange for penalties that include a new range of fines depending on the stage of the criminal case.

Settlement procedures for withholding tax (WHT) violations: Law No. 7 authorizes the Minister of Finance or a delegate to settle violations related to WHT noncompliance within the prescribed deadline. The settlement requires a new rate, reduced from the original 25% rate, comprised as follows:

  • Payment of 12.5% on non-withheld, non-deducted or uncollected taxes
  • Payment of 12.5% on withheld, deducted and collected taxes that have not been remitted to the tax authority

In addition to the above, the original tax due and any applicable late-payment fees should be paid.

Implications

Taxpayers should consider the provisions of Law No. 7 and assess the applicability of availing potential tax facilities and settlements.

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Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young Egypt, Cairo

Ernst & Young LLP (United States), Middle East Tax Desk, New York

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2025-0570

 
 

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