In February 2025, Law No. 5 of 2025 was enacted to settle the status of certain taxpayers and assessees, providing tax relief measures to enhance tax compliance and ease financial burdens. This initiative aims to improve Egypt's investment climate and promote tax justice.
Key Features of the Law:
1. No Retroactive Tax Assessment
Unregistered taxpayers cannot be assessed for tax liabilities related to periods before the enactment of this law, provided that they submit a registration request within three months of the law's enforcement and that no prior tax actions have been taken against them.
This provision encourages individuals and businesses to join the tax system without fear of retroactive penalties, thereby increasing tax transparency and voluntary compliance.
2. Submission of Late Tax Returns Without Penalties
Taxpayers are allowed to submit tax returns that were not filed before the enactment of this law or to amend previously submitted returns without incurring late payment fees, additional taxes, or penalties.
This step is intended to reduce the financial burden on taxpayers and encourage them to rectify their tax situations without concerns about financial penalties.
3. Settlement of Estimated Tax Audits
For taxpayers who underwent estimated tax assessments for periods before January 1, 2020, they can:
- Pay 30% of the tax due according to their self-declared return without affecting the tax liability in the return.
- Or pay a tax amount equal to the most recent prior tax agreement plus 40%, with the option to pay in four quarterly installments from the date of the payment notice.
These measures offer taxpayers flexible options to settle their tax files, reducing tax disputes and easing financial obligations.
4. Settlement of Tax Disputes
Taxpayers audited for periods before January 1, 2020, can submit a request to settle disputes in exchange for:
- Paying 100% of the principal tax amount within three months of submitting the request.
- A full waiver of 100% of late payment fees or additional taxes.
This measure aims to reduce pending tax disputes and encourage taxpayers to settle their obligations while benefiting from penalty waivers, thereby accelerating tax revenue collection.
5. Tax Relief on Real Estate Transactions and Unlisted Securities
In the case of real estate transactions or transactions involving unlisted securities, for individuals not engaged in other business activities, the following provisions apply:
- Tax assessment with a 100% waiver of late payment fees.
- The tax must be paid within six months from the transaction date.
This measure is a crucial step in encouraging taxpayers to disclose their financial transactions and facilitating tax payment processes, thereby reducing tax evasion in this sector.
Objectives of the Law
This law aims to:
- Encourage Voluntary Compliance: By providing incentives for taxpayers to join the tax system and file their returns regularly.
- Ease Financial Burdens: By eliminating penalties and surcharges for late filers, allowing them to restructure their tax obligations.
- Achieve Tax Justice: By offering all taxpayers equal opportunities to rectify their tax status without discrimination.
- Enhance the Investment Climate: By simplifying tax procedures, making Egypt more attractive to local and foreign investors.
Law No. 5 of 2025 represents a positive step toward improving Egypt’s tax system, offering taxpayers an opportunity to regularize their status in a simplified manner, which in turn positively impacts the national economy.
Download the Full Law Text
To access the complete text of Law No. 5 of 2025, you can download the attached PDF file via the following link