The Ministry of Finance introduced a second package of tax facilitations for public consultation last week. After discussions with tax specialists and others, it will take note of their observations and introduce the new measures in January 2026.
This is the second of four packages of tax facilitations meant to broaden the tax base, advance digitisation, and reduce direct human interaction in tax procedures.
The ministry released the first package in December 2024, targeting small and medium-sized enterprises (SMEs) and long-standing tax files. It exempted these entities from tax liabilities in exchange for regularising their status with the Egyptian Tax Authority (ETA) and declaring their business activities beginning last year in a step towards resolving accumulated issues.
According to Rasha Abdel-Aal, head of the ETA, the first phase was successful, with the business community and SMEs responding positively and submitting their tax returns on time. The second package comes at a sensitive moment for Egypt’s economy, as the productive sector faces pressure from rising financing costs, weakening demand, and growing obligations on SMEs.
At the same time, the government is working to improve the investment climate and increase tax revenues without increasing the burden on taxpayers by expanding the tax base and promoting voluntary compliance rather than relying on stricter enforcement.
The two facilitation packages were recommended by the International Monetary Fund (IMF), which recommends expanding the tax base instead of raising taxes on existing taxpayers.
The second package builds on the first, which focused on settling disputes and reducing penalties. It places greater emphasis on facilitating procedures and digitisation in what the government regards as part of the long-term structural reform of the tax system.
The government has been developing the tax system and integrating digital processes into all its operations, starting with the annual tax return, in which taxpayers declare their taxable incomes, and extending to electronic invoices and receipts that determine the profits of entities without human intervention.
In cooperation “with our partners, we have succeeded in the first package of tax facilitations,” Finance Minister Ahmed Kouchouk said as he introduced the second. He added that the simplified and integrated tax system will be targeted to activities with an annual turnover not exceeding LE20 million.
The system is one of the outcomes of the first package, which focused on SMEs.
Coordination is underway with the Micro, Small, and Medium-Sized Enterprise Development Agency to incentivise a further 100,000 taxpayers to join the simplified and integrated system, Kouchouk stated, adding that the ministries of finance and communications are collaborating to encourage entrepreneurs to join the tax system and support their expansion and growth.
Kouchouk said that the second package aims to support compliant taxpayers by granting a wide range of benefits and incentives, including the introduction of a “white list”, a “privilege card”, and priority access to specialised services.
He noted that the VAT refund departments will be restructured to simplify and accelerate procedures to improve liquidity for taxpayers, with refunds processed within one week for those on the white list, along with a doubling of the number and value of refunds.
He added that the government is also developing mechanisms to remove obstacles impeding the refund process.
The VAT refund system applies in three cases: VAT previously paid or charged on exported goods and services; tax collected in error; and credit balances outstanding for more than six consecutive tax periods, the minister noted.
Kouchouk stated that total VAT refunds during the 2024-2025 fiscal year reached LE7.2 billion, growing by 151 per cent. He pointed out that the government aims to further increase this figure to ensure the liquidity needed by taxpayers.
He also announced a legislative amendment stipulating that VAT will no longer be levied on goods in transit or services associated with them, in order to stimulate the transit trade.
In addition, a new law will reduce the VAT on medical devices from 14 per cent to five per cent, exempt inputs, components, and supplies for dialysis machines and kidney filters from VAT, and extend the suspension of VAT payments on machinery, equipment, and medical devices to four years to encourage investment.
Kouchouk said that new tax service centres will be established to provide premium services for taxpayers through e-tax systems, beginning in New Cairo, Sheikh Zayed, and New Alamein, with the aim of facilitating procedures for taxpayers and enhancing the services provided to them.
He pointed out that a new legislative amendment will allow the 2023 and 2024 tax periods to benefit from the lump-sum and proportional tax system. The system, introduced under the first facilitation package and directed at SMEs, sets an agreed fixed annual tax liability regardless of increases in turnover.
In addition, Kouchouk said, the government will shift from the capital gains tax to stamp duty to stimulate institutional investment in the Egyptian Stock Exchange. In coordination with the Financial Regulatory Authority (FRA), tax incentives will also be offered to encourage companies to list on the Exchange over a three-year period. The move is meant to improve trade volume and attract more investments, he explained.
“An electronic consultation platform will be launched for the tax community to strengthen the ‘partnership of trust’, alongside a digital system to expedite all procedures related to the liquidation and closure of companies,” Kouchouk said.
Sherif Al-Kilani, deputy minister of finance for tax policies, said that tax refunds, especially of VAT, have been one of the most frequent sources of investor complaints in recent years due to lengthy audit cycles and liquidity constraints.
He added that the new facilitation package aims to shorten the refund cycle through easy, digitalised procedures, expand the categories eligible for the Fast Track Refund System, and introduce binding timelines for the ETA to complete audits.
He added that these measures carry significant economic implications by providing immediate liquidity to the industrial and export sectors, reducing financing costs, increasing productive capacity, and reinforcing foreign investor confidence, particularly in export-oriented activities.
The measures also aim to simplify interactions with the tax system, he said, promoting what he described as “ease of compliance” through enhancing electronic registration and filing services, reducing paperwork and replacing it with automated systems, expanding services available at large, medium, and small taxpayer centres, and improving communication with taxpayers to minimise errors and disputes.
Al-Kilani explained that full digital transformation reduces direct contact between taxpayers and tax officers, limits arbitrary assessments, and enhances transparency, thereby increasing tax revenues without raising tax rates.
ETA employees have welcomed the implementation of the second facilitation package. Awatef Galal, an assistant at the ETA, noted that the new measures set the tax on real-estate disposals at 2.5 per cent of the unit’s sale value for the individual seller, even if multiple properties are sold.
This means that a person who sells more than one residential unit will pay tax only once, rather than each time a unit is sold. She said that this will make it easier for taxpayers to settle the real-estate disposal tax and sell the units they own without incurring additional financial burdens.
She added that the first package had yielded positive results for the ETA, as tax files dating back to 2013 were resolved after the package granted an exemption for past liabilities and allowed taxpayers to start afresh.
This encouraged many taxpayers to settle their old files and open a new chapter with the ETA, she said.
* A version of this article appears in print in the 11 December, 2025 edition of Al-Ahram Weekly
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