New Tax Facilitation in Law No. 6 of 2025

As part of the state's efforts to support small and medium enterprises (SMEs), Law No. 6 of 2025 has been enacted, introducing a set of tax incentives and facilitations for projects with an annual turnover not exceeding 20 million EGP. This law aims to encourage startups and medium-sized businesses to integrate into the formal economy and benefit from a simplified tax system.

1. Eligible Businesses

This law applies to projects that:

Have an annual turnover not exceeding 20 million EGP.
Engage in professional or commercial activities, whether tax-registered or not.
Commit to submitting tax returns on time and joining electronic systems such as e-invoicing and e-receipts.

2. Key Tax Facilitations

1. Tax Exemptions

Exemption from the state’s financial resource development fee.
Exemption from stamp duty.
Exemption from notarization and registration fees for company establishment contracts.
Exemption of credit facility and mortgage contracts related to projects from taxes and fees.
Exemption of capital gains from the disposal of fixed assets or equipment from tax.
Exclusion of profit distributions from the usual income tax rate.

2. Simplified Tax System for SMEs

Income tax is determined based on the project's annual turnover as follows:

0.4% for projects with annual turnover below 500,000 EGP.
0.5% for projects with annual turnover between 500,000 and 2 million EGP.
0.75% for projects with annual turnover between 2 million and 3 million EGP.
1% for projects with annual turnover between 3 million and 10 million EGP.
1.5% for projects with annual turnover between 10 million and 20 million EGP.

Note:

If a project's annual turnover exceeds 20 million EGP within five years of benefiting from the law, it can continue enjoying tax benefits provided the increase does not exceed 20%.
If the increase surpasses this percentage or occurs repeatedly, the project will lose eligibility for the law starting from the following year.

3. Tax Audit Relief

Tax returns of businesses covered by the law will not be audited until five years after applying for benefits under the law.

4. Exemption from Certain Accounting Obligations

Businesses under the law are not required to maintain traditional accounting records.
They only need to comply with simplified systems specified by the Minister of Finance.

5. Simplified Tax Return Procedures

Businesses must submit a simplified tax return annually.
For VAT, returns are submitted every three months.

3. Excluded Businesses

The law does not apply to:

Consulting professions where more than 90% of income comes from only one or two clients.
Businesses manipulating turnover to qualify under the law without legitimate economic justification.
Businesses that split or restructure solely to benefit from tax incentives.

4. Effective Date of the Law

The law takes effect from the first month following its publication in the Official Gazette.
The Ministry of Finance will issue executive regulations within one month of its implementation.

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Law No. 6 of 2025 represents a significant step in supporting SMEs by reducing tax burdens and offering administrative facilitations that help businesses grow and integrate into the formal economy. Additionally, the law aims to promote digital transformation in Egypt’s tax system through mandatory e-invoicing and e-receipts.

If you are a small or medium business owner, this law provides a golden opportunity to benefit from a fair and simplified tax system, ensuring financial stability and enhancing your business’s competitiveness.

To access the full text of the law, you can download it here.

New Tax Facilitation Law No. 6 of 2025.