Egypt’s Second Tax Facilitation Package: A Summary of Key Reforms

Published in the Official Gazette on 28 July 2026, Egypt’s second tax facilitation package introduced significant reforms designed to support SMEs, ease dispute resolution, and refine corporate and VAT structures. These measures took effect on 29 July 2026.

1. Corporate & Transaction Tax Changes

• Bad Debts: Legal recovery requirements are reduced from 18 to 12 months from maturity. Debts ≥EGP 10,000 can be written off without legal action, capped at 1% of year-end receivables.
• Real Estate Disposal Tax (2.5%): Covers real estate or construction land, including inherited property and personal-use sales, with the payment deadline extended from 30 to 60 days. Disposals are not treated as business activities unless the Egyptian Tax Authority proves an intent to trade.
• Capital Gains Tax (CGT): Gains on EGX-listed securities are exempt for residents, while unpaid CGT liabilities from 16 June 2023 to 29 July 2026 are fully waived. Unlisted shares held ≥3 years at fair value receive inflation adjustments to acquisition costs using average CBE discount and credit rates.
• Dividends: The 10% non-deductible add-back for parent/holding companies is removed, and domestic corporate groups transition to a full participation exemption regime.
• Infrastructure & Listing Incentives: Thin-capitalization debt-to-equity ratio raised to 4:1 (from 3:1) for qualifying national projects and an offshore WHT exemption on unrelated loan interest (minimum 5-year term). New EGX-listed companies meeting specific size thresholds can deduct 15% of CIT due for up to six years.
• Stamp Duty: Listed securities rates for transactions under 33% capital are unified at 0.05% per party (0.025% for same-day trades).

2. Value-Added Tax (VAT) Updates

• Medical Devices: Medical-use devices receive a 5% reduced VAT rate. Industrial-use medical devices are eligible for a VAT suspension regime for up to 3 years.
• Refunds & Exemptions: VAT refund eligibility permitted after >4 consecutive periods (or >3 months for SMEs with turnover <EGP 20m). Natural gas loses its VAT exemption (replaced with an EGP 20 per 1,000 cubic feet schedule tax).

3. SME Support, Disputes & Risk Measures

• SME Relief: SMEs with turnover under EGP 20m pay a simplified 0.4%-1.5% turnover tax instead of CIT with various tax exemptions. A 20% one-time buffer allows businesses exceeding EGP 20m but under 24m to retain the 1.5% turnover rate for that year.
• Amnesty & Settlement: Newly registering businesses receive a 100% back-tax waiver. A 6-month grace period applies to amend post-FY2020 filings without penalty, while tax dispute requests are extended through 31 December 2026.

Compliance Risks: Requires full e-invoicing/e-receipt compliance. Unremitted WHT faces a 12.5% statutory compensation fee alongside principal and interest. Single-client consultants (≥90% income from 1-2 clients) and artificial splits are excluded from SME perks.