New Tax Facilities in Egypt

As part of the Egyptian government's efforts to improve the investment climate and reduce tax burdens on individuals and businesses, the Ministry of Finance has announced a new package of tax facilities aimed at supporting economic growth and enhancing voluntary tax compliance. These facilities include amendments to tax procedures, reductions in penalties, and simplifications in regulations, ensuring greater clarity and stability for taxpayers.

Objectives of the New Tax Facilities

1. Enhancing the relationship between taxpayers and the Tax Authority by providing greater transparency and fairness in tax dealings.
2. Encouraging local and foreign investment by reducing tax burdens and offering incentives to investors.
3. Expanding the tax base by integrating the informal economy into the formal system.
4. Simplifying tax procedures to facilitate compliance and reduce the time required for filing tax returns.
5. Achieving tax justice by reconsidering penalties and fines and exempting late taxpayers under specific conditions.
6. Stimulating strategic sectors by offering additional tax incentives for vital industries such as manufacturing, agriculture, and technology.

Key Features of the Tax Facilities

1. Exemptions and Reductions in Tax Penalties

• Allowing taxpayers who failed to submit tax returns from 2020 to 2023 to file them within a specified grace period without facing legal penalties.
• Reducing the value of fines and interest due on delayed tax payments.
• Allowing tax arrears to be paid in installments according to a schedule determined by the Tax Authority.
• Granting tax exemptions to sectors contributing to economic growth, such as modern industrial projects.

2. Simplification of Tax Returns

• Reducing the number of pages in tax returns to make them clearer and easier to complete.
• Eliminating unnecessary forms and replacing them with simpler procedures.
• Facilitating electronic tax registration and minimizing the need for paper documents.
• Providing a comprehensive guide for taxpayers on how to electronically file their tax returns.

3. Support for Small and Medium Enterprises (SMEs)

• Implementing a simplified tax system for enterprises with an annual turnover not exceeding EGP 15 million.
• Reducing the tax rates imposed on small businesses to support their growth and expansion.
• Offering incentives to startups to encourage their integration into the formal economy.
• Exempting small enterprises from certain administrative fees for one year from the date of registration.

4. Incentives for Compliant Companies

• Granting tax discounts to taxpayers who pay their taxes on time.
• Accelerating the process of refunding value-added tax (VAT) for compliant companies.
• Exempting new companies from certain taxes for a specified period depending on their industry and economic importance.
• Offering special tax incentives for companies that achieve high employment rates.

5. Measures to Integrate the Informal Economy

• Providing temporary tax exemptions for unregistered businesses that formalize their status.
• Facilitating tax registration procedures for freelancers and informal sector workers.
• Offering benefits to companies that hire workers from the informal economy.
• Establishing specialized offices to help informal workers register with the Tax Authority easily.

6. Development of the VAT Refund System

• Reducing the VAT refund period from several months to a shorter timeframe.
• Creating an electronic system to track refund requests and minimize human intervention in the process.
• Increasing the number of beneficiaries of this system by simplifying its requirements.
• Providing special facilities for exporters regarding VAT refunds on industrial inputs.

7. Establishment of an Investor Support Unit

• Allocating a new unit within the Tax Authority to support investors and help them resolve tax issues.
• Providing free tax consultations for new investors to educate them about their obligations and rights.
• Improving communication mechanisms between investors and the government to ensure effective implementation of tax decisions.
• Creating a dedicated online platform for investors to submit inquiries and receive direct responses from the Tax Authority.

Future Expectations for These Facilities

These tax facilities are expected to:

• Increase voluntary tax compliance rates.
• Attract more foreign and local investments.
• Improve Egypt’s ranking in global business environment indicators.
• Reduce tax disputes between taxpayers and the Tax Authority.
• Strengthen state revenues without imposing new taxes.
• Support SME growth and reduce unemployment rates.

You can download the Tax Incentives and Facilities Guide here

These tax facilities represent an important step towards achieving tax stability and stimulating the business environment in Egypt. By reducing burdens and offering incentives, the government aims to balance economic support with enhanced tax compliance. Taxpayers and business owners are encouraged to take advantage of these facilities to ensure proper compliance and maximize the benefits offered. These reforms contribute to creating a more attractive investment climate and fostering sustainable economic growth.