Egypt Introduces Tax Reforms to Attract Investment and Boost Economic Growth

| Picture: Ahmed Kouchouk during the press conference attended by Prime Minister Mostafa Madbouly, September 11, 2024

Egypt’s Minister of Finance, Ahmed Kouchouk, has announced a new set of tax reforms aimed at increasing transparency, simplifying processes, and attracting more foreign and domestic investment. The reforms, unveiled during a press conference on Wednesday, aim to boost Egypt’s economic competitiveness and provide clearer guidance for investors.

Key points from the announcement include:

Creation of a New Investor Support Body:

• A new entity will be established to provide investors with detailed information on tax obligations before making new investments.

• This initiative aims to offer foresight for investors, helping them understand their rights, commitments, and the incentives available to them.

Simplified Tax System for Small and Micro Businesses:

• Businesses, freelancers, and professionals with annual revenues under EGP 15 million ($310,000) will benefit from a simplified and integrated tax system.

• This reform seeks to broaden the tax base, ensuring benefits for both the government and businesses.

Incentives to Formalize Informal Businesses:

• The government will offer incentives to informal businesses to encourage them to formalize. These include allowing tax returns for 2021-2023 to be submitted or amended without penalties.

• A risk-based approach to tax audits will be adopted, and penalties for late payments will be capped at the original tax amount.

Streamlining Tax Processes:

• Tax returns will be simplified, and tax standardization across various regions will be introduced.

• The VAT refund process for foreign investors will be made more efficient.

• A centralized mechanism for resolving tax disputes will also be implemented.

Investment in Tax Authority Employees:

• The Egyptian government will invest in training and development programs for employees of the Egyptian Tax Authority.

• A new performance evaluation system will be introduced to measure productivity and service quality.

Capital Gains Tax:

• It was not confirmed whether the suspended 10% capital gains tax on stock exchange investments would be reinstated, despite pressure from the International Monetary Fund (IMF).

• The minister has voiced opposition to reinstating the tax, instead focusing on expanding the tax base without raising existing taxes.

Boosting Foreign Direct Investment:

• The reforms are part of Egypt’s broader goal to triple foreign direct investment, which reached a record $10 billion in 2022-23.

• Further tax reforms are expected in the coming weeks, including measures to increase tax collection from the informal economy.

The press conference, held under the patronage of H.E. Dr. Mostafa Madbouly, Prime Minister of Egypt, marked the launch of the first package of tax incentives, fully backed by the Egyptian government.

These reforms signal Egypt’s commitment to fostering a business-friendly environment, improving economic productivity, and making the tax system more efficient and transparent for all investors.

SOURCE/ RECOMMENDED READ: 

• Tax reforms launched by Egypt to entice more investors | AGBI

• Egypt unveils tax incentives to boost economy, simplify processes - Dailynewsegypt

• مؤتمر صحفي لرئيس مجلس الوزراء بشأن إعلان حزمة تسهيلات ضريبية - Full press conference on YouTube