Arab Finance: Egypt will implement a second package of tax facilitation measures immediately after the legislation is officially issued, Minister of Finance Ahmed Kouchouk said in a statement.
This comes following parliamentary approval of the reforms aimed at easing the tax burden, boosting investment and supporting key sectors.
The package allows taxpayers to deduct the mandatory solidarity contribution from their taxable income, reducing their overall tax burden.
To encourage transit trade and strengthen Egypt's position as a regional logistics hub, the government will exempt goods in transit and related services from value-added tax (VAT).
The reforms also exempt all companies providing non-banking financial services from VAT, regardless of their regulator, while financial services offered by Egypt Post will also be exempt.
To support industry and investment, the government will extend the suspension of VAT payments on machinery and equipment used in industrial production and medical devices to four years from two.
VAT on medical devices will be cut to 5% from 14%, while inputs, components, and spare parts used in kidney dialysis machines and filters will be exempt from VAT.
The exemption will also apply to production inputs for medical devices that are worn, implanted, or carried in the body to compensate for disabilities or physical impairments.
The package shortens VAT refund periods, allowing simplified tax system businesses to reclaim VAT credit balances after three months instead of six, while other businesses will receive refunds within four months instead of six to improve liquidity.
The government will also introduce a three-year investment incentive to encourage companies to list on the Egyptian Exchange (EGX), to increase market trading and investment.
As part of broader capital market reforms, Egypt will replace the capital gains tax on securities with a stamp tax to reduce costs and stimulate trading in the EGX.
Hence, the stamp tax for non-residents will be reduced to 0.5 per thousand from 1.25 per thousand to align treatment with resident investors.
The package also introduces an incentive equivalent to the Central Bank of Egypt's (CBE) announced lending and discount rate, which will be added to the acquisition cost of unlisted securities held for at least three years before disposal.
Additional measures include eliminating double taxation on dividend distributions for Egyptian resident holding and subsidiary companies by collecting the tax only once, increasing deductible interest expenses on loans for companies participating in national infrastructure projects, and exempting such companies from withholding tax on foreign loans and credit facilities.
The reforms also provide temporary tax cards valid for eight months to simplify business establishment and licensing procedures, facilitate the write-off of small debts, and reduce administrative burdens on financing companies.
The real estate transaction tax for individuals will remain unchanged at 2.5% of a property's sale value regardless of the number of transactions, while transfers between spouses, children, and direct descendants will remain fully exempt. The deadline for paying the tax will be extended to 60 days from 30 days after the transaction.
Kouchouk noted that the government will also extend the tax dispute settlement law through the end of December 2026 to encourage the voluntary resolution of more tax disputes.
