globaltaxnews.ey.comSign up for tax alert emailsPrintDownload | ||||||
14 August 2026 Egypt announces second tax facilitation package
On 28 July 2026, the Egyptian Government announced a second tax facilitation package through Issue No. 30 Bis (A) of the Official Gazette. The package includes the issuance of Law No. 148 of 2026, Law No. 149 of 2026, Law No. 150 of 2026, Law No. 151 of 2026, Law No. 152 of 2026 and Law No. 153 of 2026, which amend certain provisions of the Income Tax Law, the Value-Added Tax (VAT) Law, the Unified Tax Procedures Law, the Stamp Duty Law and the State Financial Resources Development Duty Law, in addition to extending the application of the tax dispute settlement regime.
The amendments generally apply one day from their publication in the Official Gazette, unless a specific provision states otherwise. Businesses should consider the impact of these amendments on their transactions, tax compliance obligations and open tax disputes in Egypt. The amendments reduce the period for undertaking legal procedures to recover bad debts from 18 months to 12 months from its maturity date for tax purposes. An exception applies to bad debts not exceeding 10,000 Egyptian pounds (EGP10,000) per debt, which may be deducted without undertaking the prescribed legal collection procedures, provided the total debts do not exceed 1% of the taxpayer's year-end receivables balance at the end of the taxable year, subject to clarification under the Executive Regulations. The amendments state that the 2.5% real estate disposal tax applies to real estate or land for construction purposes, regardless of the number of disposals the taxpayer undertakes. The scope of the package has been expanded to cover heirs' disposals of inherited real estate or land, whether in its existing state or after the construction of buildings for their personal use. The same treatment shall apply to the disposal of real estate or land owned by the seller, whether in its existing state or after the construction of buildings for the seller's personal use, regardless of the number of such disposals. The amendments further clarify that such disposals will not be regarded as a business activity unless the Egyptian Tax Authority (ETA) proves that they were undertaken with the intention of trading and generating profit. The deadline for remitting the tax has been extended from 30 days to 60 days from the date of disposal. Capital gains derived from the disposal of securities listed on the Egyptian Stock Exchange are exempt from tax for resident taxpayers irrespective of where the gains are realized. However, losses arising from these disposals are not deductible for tax purposes. This exemption does not apply to capital gains realized from transactions resulting in the delisting of the company's shares from the Egyptian Stock Exchange. The amendments also exempt outstanding CGT liabilities relating to disposals of securities listed on the Egyptian Stock Exchange undertaken between 16 June 2023 and the date on which the new law enters into force (29 July 2026), by waiving any tax that remains unpaid for these transactions. The amendments introduce a mechanism for determining the acquisition cost of unlisted securities and quotas for capital gains tax purposes. Under this mechanism, the acquisition cost shall be inflation-adjusted using the average Central Bank of Egypt discount and credit rates during the holding period, provided the shares have been held for at least three years and transaction is held at fair value, subject to clarification under the Executive Regulations. Previously, dividends received by a parent or holding company from qualifying resident or nonresident subsidiaries were exempt from corporate income tax, subject to adding back 10% of the dividend amount to the taxable pool as deemed nondeductible expenses, provided that the parent or holding company holds at least 25% of the subsidiary's capital or voting rights and satisfies the applicable two-year holding period requirement or commitment. The amendments remove the 10% add-back requirement, resulting in a full participation exemption for qualifying dividends, provided that the same conditions are met. The amendments replace the existing dividend WHT credit mechanism applicable to resident corporate groups with a participation exemption regime. Previously, tax due on dividends distributed by a resident company to a resident recipient could be offset against the tax payable on dividends distributed by that latter company to a third resident company, subject to certain conditions. Under the new rules, qualifying dividends received by the resident recipient are excluded from its taxable pool, rather than being relieved through a tax credit mechanism, provided the relevant conditions are satisfied. The amendments introduce an exception to the general thin-capitalization rules for entities undertaking qualifying national infrastructure projects designated by a decision of the Prime Minister. Under the exception, interest on loans and borrowings may remain deductible up to a 4:1 ratio, instead of the current 3:1 threshold, provided that: (1) the projects are designated by a decision from the Prime Minister; (2) the financing is obtained from unrelated parties; and (3) the taxpayer's investment in the projects represents at least 25% of the taxpayer's total investments. Interests on loans or credit facilities obtained by public sector companies, public business sector companies, and private sector companies from unrelated parties for the purpose of financing qualifying national infrastructure projects, shall be exempt from offshore WHT, subject to the following conditions:
The amendments allow the comprehensive health contribution payable by all companies operating in Egypt at the rate of 0.25% of total annual revenues to be treated as a deductible expense for corporate income tax purposes. Previously, the contribution was treated as nondeductible. Companies listing their shares on the Egyptian Stock Exchange based on a prospectus approved by the Financial Regulatory Authority may be eligible for a tax incentive allowing them to deduct 15% of the corporate income tax due as per the tax return for three years from the listing date, with the possibility of extending the incentive for an additional equivalent period.
The amendments introduce a new stamp duty treatment applicable to transactions involving securities listed on the Egyptian Stock Exchange representing less than 33% of the company's capital. Previously, nonresident buyers and sellers were each subject to stamp duty at a rate of 0.125% of the transaction value, whereas resident buyers and sellers were each subject to a lower rate of 0.05%. Under the amended provisions, a unified stamp duty rate of 0.05% applies to both the buyer and the seller, regardless of residency status. In addition, same-day purchase and sale transactions involving the same listed securities are subject to a reduced stamp duty rate of 0.025% (0.25 per thousand) for each party, subject to clarification under the Executive Regulations. Investment fund units remain excluded from such amendments. Transactions carried out by companies licensed as an approved market maker under Capital Market Law No. 95 of 1992 are exempt from stamp duty. The entity settling the listed securities transaction must withhold and remit the stamp duty to the tax office within five days after the month of the transaction and is jointly liable to the buyer and seller for the duty and any late payment amounts. Devices used for medical purposes are now subject to the reduced 5% VAT rate when used in the production of goods or the provision of services. The amendments expand the VAT suspension regime to cover eligible medical devices used by factories and production units in industrial production, in addition to imported or locally purchased machinery and equipment. The suspension applies for one year and may be extended where justified, up to a total period of three years, as opposed to the previous two-year limit. If the ETA confirms that the assets were used in industrial production during the suspension period, the suspended VAT is treated as exempt. The producer may not dispose of the exempted assets for a different purpose during the following five years, unless the Authority is notified and the VAT due is settled. If the assets are not used in industrial production within the prescribed period, VAT and any additional tax become payable. The VAT exemption for goods in transit has been extended to cover related services, provided the transportation is carried out under Customs Authority supervision in accordance with the Customs Law. VAT credit balances may now be refunded after more than four consecutive tax periods, instead of the previous threshold of more than six periods. For taxpayers subject to Law No. 6 of 2025 with annual turnover not exceeding EGP20m, the refund may be available after more than three months. The exemption for natural materials has been refined to cover materials in their natural state, excluding crude oil and natural gas. The exemption for certain medical and disability-related devices has been updated to also cover related production inputs, parts and accessories. The exemption for financial services has been expanded to include relevant services supervised by the Central Bank of Egypt, in addition to services supervised by the Financial Regulatory Authority. The amendment narrows the scope of the VAT exemption previously applicable to the sale and lease of vacant land, agricultural land, and residential and nonresidential buildings and units. Specifically excluding the lease of buildings and units used as an independent headquarters for conducting a business activity is now excluded from the exemption. However, the practical scope and application of this provision remain unclear at this stage. Further clarification is expected through the forthcoming Executive Regulations, which should confirm the types of premises covered by the exclusion and its implementation in practice. Natural gas is now subject to schedule tax at EGP20 per 1,000 cubic feet, after being excluded from the VAT exemption list. Previously, taxpayers with annual turnover exceeding EGP500,000 were generally required to maintain regular accounting books and records. The amendment removes this threshold, making the requirement applicable to all taxpayers, subject to the exceptions under Law No. 6 of 2025. The ETA may issue a temporary tax card for up to eight months to support incorporation and licensing procedures; however, the temporary card cannot be used to issue receipts or electronic invoices. A departure fee of EGP100 shall apply upon departure from the Egyptian territory. The fee does not apply to Egyptian or foreign drivers of public passenger or goods transport vehicles, or to workers on routes or trucks that regularly cross Egypt's borders. A fee of EGP35 per ton applies to all types of cement produced in Egypt. Cement factories must remit the fee on their production to the ETA. Law No. 152 of 2026 extends the tax dispute settlement regime under Law No. 79 of 2016, allowing pending applications and new dispute settlement requests to be submitted until 31 December 2026. Taxpayers should assess how the amendments may affect their tax positions, particularly in relation to income tax, VAT, stamp duty, financing arrangements, documentation requirements and tax disputes.
Document ID: 2026-1750 | ||||||
