Part II of Egypt’s New Tax Facilitation Package: Key Legislative Amendments Affecting VAT, Income Tax, Tax Procedures, and Capital Markets
Executive Summary
On 28 July 2026, Egypt published a comprehensive package of tax legislation through Official Gazette No. 30 (A). Rather than introducing isolated amendments, the package represents a coordinated reform agenda covering value added tax (VAT), income tax, tax procedures, stamp duty, state resource development fees, and tax dispute settlement.
The reforms seek to achieve several strategic objectives:
• Encourage domestic and foreign investment.
• Reduce the tax cost of industrial expansion.
• Strengthen Egypt’s capital market.
• Simplify business establishment.
• Enhance voluntary tax compliance.
• Improve tax certainty while maintaining sustainable public revenues.
Taken together, these legislative changes signal Egypt’s continued transition toward a more modern, investment-oriented tax system.
1. Supporting Industrial Investment Through VAT Reform
One of the most significant reforms concerns the VAT treatment of production machinery and medical equipment used in manufacturing.
Under the new rules, VAT on imported or locally purchased production machinery and qualifying medical equipment may be suspended for an initial one-year period, with possible extensions up to a total of three years where justified. Once the Egyptian Tax Authority verifies that the assets have been used for industrial production during the permitted period, the suspended VAT is effectively waived. However, if the assets are disposed of within five years after benefiting from the exemption, the taxpayer must notify the Egyptian Tax Authority and pay the applicable VAT.
The VAT amendments also introduce several additional changes, including:
• Expanded exemptions for selected goods and services.
• Exemption of postal financial services and regulated non-banking financial services.
• Clarification of the VAT treatment of commercial buildings used as business premises.
• Introduction of a specific levy on natural gas.
• Updated VAT refund provisions.
Collectively, these measures are designed to lower investment costs, improve VAT neutrality, and reduce cash-flow pressures for manufacturers.
2. Temporary Tax Cards: Simplifying Business Start-Up
The amendments to the Unified Tax Procedures Law introduce a temporary tax card valid for eight months.
The temporary registration enables entrepreneurs and investors to complete licensing and incorporation procedures before obtaining permanent tax registration.
To preserve the integrity of Egypt’s digital tax administration, temporary tax cards cannot be used to issue electronic invoices or electronic receipts.
This measure is expected to improve the ease of doing business while reducing administrative barriers during the early stages of investment.
3. Income Tax Reform: Encouraging Investment and Increasing Tax Certainty
The amendments to the Income Tax Law represent the largest component of the legislative package.
Among the most significant reforms are:
• revised bad debt deduction rules;
• updated taxation of real estate disposals;
• new capital gains tax rules for unlisted shares;
• revised dividend taxation;
• expanded deductibility of financing costs for qualifying infrastructure projects;
• tax incentives for companies listing on the Egyptian Stock Exchange;
• simplified settlement rules for small and medium-sized businesses;
• transitional relief relating to capital gains taxation.
From a policy perspective, these amendments seek to balance revenue collection with investment competitiveness while providing greater certainty for taxpayers.
4. Strengthening Egypt’s Capital Market
Several amendments are specifically intended to improve the attractiveness of Egypt’s capital market.
These include:
• revised taxation of capital gains;
• updated rules for listed and unlisted securities;
• a 15% investment incentive for qualifying companies undertaking public listings on the Egyptian Stock Exchange;
• revised stamp duty treatment of securities transactions;
• exemption of licensed market makers from certain stamp duty obligations.
These reforms are expected to improve market liquidity, encourage new listings, and strengthen investor confidence.
5. Extension of the Tax Dispute Settlement Regime
The government has extended the application of the Tax Dispute Settlement Law until 31 December 2026.
This extension allows taxpayers with pending disputes to continue benefiting from the settlement mechanism while helping reduce litigation before Egyptian courts.
For many taxpayers, the extension presents an important opportunity to resolve outstanding tax matters under an established legal framework.
6. State Resource Development Fee Amendments
The reform package also amends the State Resources Development Fee Law.
The most notable changes include:
• increasing the departure fee when leaving Egypt; and
• increasing the development fee imposed on cement production.
While these measures primarily aim to strengthen public revenues, they also have direct implications for the tourism and construction sectors.
Practical Considerations for Businesses
Businesses operating in Egypt should carefully evaluate the implications of the new legislation.
Priority actions include:
• reviewing VAT treatment of planned capital investments;
• assessing eligibility for the VAT suspension mechanism;
• revisiting financing structures in light of the revised interest deductibility rules;
• evaluating the tax implications of property and securities transactions;
• considering available stock exchange incentives;
• reviewing opportunities to settle outstanding tax disputes before the end of 2026.
Early assessment will help taxpayers maximize available incentives while ensuring timely compliance.
Conclusion
Egypt’s 2026 legislative package represents one of the country’s most comprehensive tax reform initiatives in recent years. Rather than focusing solely on revenue collection, the reforms seek to create a more balanced tax framework that combines investment incentives, administrative simplification, stronger capital markets, and enhanced tax certainty.
For multinational groups, investors, tax advisers, and businesses operating in Egypt, these reforms will require careful assessment as implementation begins. The practical impact of the package will ultimately depend on the timely issuance of executive regulations and the consistent application of the new rules by the Egyptian Tax Authority.