File Photo: Egypt parliament. Ahram.
The amendments to Law No. 91 of 2005 form part of the government's broader tax reform programme led by the Ministry of Finance and the Egyptian Tax Authority to modernize the tax system and improve the business climate.
According to a parliamentary committee report, the amendments seek to strike a balance between safeguarding state revenues and supporting economic development while enhancing Egypt's competitiveness and investment environment.
Among the key changes are new tax facilities for bad debts. The amendments reduce the minimum period required before uncollectible debts can be recognized for tax purposes from 18 months to 12 months.
They also add a new criterion allowing debts to qualify if the debtor has ceased business activities for more than three years without identifiable assets.
The new rules are intended to reduce administrative burdens, particularly for businesses in the finance and retail sectors that deal with large numbers of customers and relatively small debts. To ensure proper governance, the total value of deductible bad debts will be capped at one percent of the taxpayer's outstanding receivables at the end of the tax year, under rules to be set by the executive regulations.
The amendments also raise the threshold below which certain legal procedures for debt collection can be waived to EGP 10,000, easing compliance costs for taxpayers.
Additionally, the parliament approved significant changes to the real estate transactions tax. Property disposals will remain subject to a 2.5 percent tax regardless of the number of transactions, provided they are not deemed commercial trading activity.
The amendments also exempt property transfers between spouses, parents, children, and other direct ascendants and descendants from the tax, while placing the burden on the Egyptian Tax Authority to prove that the declared transaction value is inaccurate if it disputes the stated price.
Another key provision exempts capital gains from the sale of securities listed on the Egyptian Exchange from income tax, in line with the government's move towards applying a proportional stamp tax instead. The measure aims to prevent double taxation and improve the attractiveness of Egypt's capital market.
During the same session, parliament also gave final approval to a separate bill amending the Universal Health Insurance Law after extracting its provisions from the income tax bill.
The amendments designate the solidarity contribution under the health insurance system as tax revenue to be assessed and collected annually by the Egyptian Tax Authority alongside income tax returns.
Although the proceeds will initially be transferred to the state treasury, the government will be required to allocate an equivalent amount automatically to the Universal Health Insurance Authority to ensure the sustainability of the system's financing.
The legislation also allows solidarity contributions to be treated as a deductible business expense for income tax purposes, reducing the tax burden on contributors.
Under the new law, the finance minister, in coordination with the Universal Health Insurance Authority, must issue the executive decisions needed to implement the amendments within 60 days of the law entering into force.
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