In a recent announcement, Egypt’s Minister of Finance, Ahmed Kouchouk, introduced an array of tax incentives aimed at invigorating the nation’s economy. This initiative, set to be fully operational within the current fiscal year, is part of Egypt’s broader strategy to revamp its tax framework and spur both investment and economic momentum.
During a press conference at the government headquarters in the New Administrative Capital, Kouchouk detailed the government’s dedication to cultivating a fair and transparent tax environment, which he believes is crucial for long-lasting partnerships within the tax community. He stressed that the government is attentive to the needs and challenges voiced by various stakeholders, including the tax, industrial, commercial, and economic sectors, and is committed to overcoming these hurdles through persistent innovation.
A significant highlight of this reform is the introduction of a streamlined tax system that caters to small and medium enterprises (SMEs) with annual earnings up to EGP 15 million, this reform aims to support small businesses, startups, freelancers, and professionals with a suite of incentives, exemptions, and facilities applicable to income tax, VAT, stamp duties, and more.
This initiative includes substantial relief measures, such as exemptions from capital gains taxes and registration fees for those who adopt this simplified system. For instance, only four VAT declarations will be needed each year, and the first audit will be deferred until five years have passed, creating a less burdensome process for new entrepreneurs, as noted by Al-Monitor.
The government is also introducing a central clearing system for electronic settlements, which will enable taxpayers to manage their financial interactions with the government more efficiently. Additionally, a cap will be placed on late payment penalties, ensuring that they do not surpass the original tax amount, as highlighted by the Financial Times. This measure is designed to alleviate financial strain from delayed audits or lengthy dispute processes.
To promote compliance, unregistered taxpayers will be encouraged to come forward without fear of penalties for previous liabilities. The ministry is offering a grace period for taxpayers to amend their returns from previous years (2020-2023) without incurring fines. Furthermore, Economic Times reports that the threshold for mandatory transfer pricing studies will be doubled to EGP 30 million.
On the digital front, the government plans to enhance the Investor Support Unit’s functionality and align its practices with international standards by enabling electronic submissions of complaints and documents. This move is part of a larger push to integrate data and electronic systems to streamline tax procedures, ensuring better returns for taxpayers.
Kouchouk also announced the progressive elimination of declarations without supporting documentation, set to be complete by 2026. The audit process will be reformed to include a sample audit system across all tax offices, and guidelines will be standardized and made available according to business sectors, providing clarity and reducing taxpayer burden, as emphasized by the World Bank Group.
In concluding his presentation, Kouchouk confirmed the establishment of independent bodies to gauge taxpayer satisfaction, aiming to adapt and sustain developmental progress. The Tax Authority’s website will be revamped to provide accessible information on legislation and circulars to the tax community, along with comprehensive guides that outline investor rights and tax law benefits.
Finally, Kouchouk revealed an advanced electronic portal for taxpayer complaints, underscoring the government’s commitment to addressing taxpayer concerns efficiently and transparently, as affirmed by Reuters. This comprehensive overhaul of the tax system marks a significant step toward realizing Egypt’s economic potential.
