Minister of Finance Ahmed Kouchouk affirmed that the laws comprising the second package of tax relief measures, recently approved by Parliament, will come into effect immediately upon their promulgation, stressing that the Ministry is fully prepared for implementation.

 

“We have delivered on every commitment we made,” the Minister said.

 

Kouchouk explained that the second package is designed to ease tax burdens, stimulate investment and production, enhance Egypt’s economic competitiveness, and foster a more business-friendly environment through a comprehensive set of tax incentives and procedural simplifications.

 

The package provides for treating the Mutual Contribution as a tax-deductible expense, thereby reducing the tax burden on all taxpayers. It also exempts transit goods and the services provided in connection with them from Value Added Tax (VAT), with the aim of promoting transit trade and strengthening Egypt’s position as a regional trade and logistics hub.

 

The Minister added that all companies providing non-banking financial services, regardless of their regulatory authority, will be exempt from VAT. Financial services provided by Egypt Post will also be exempt from VAT.

 

He noted that the package extends the suspension of VAT payment on machinery and equipment used in industrial production, as well as medical devices, from two years to four years in support of industry and investment.

 

In addition, the VAT rate on medical devices will be reduced from 14% to 5%, while inputs used in the manufacture of dialysis machines, kidney filters, their components and accessories, as well as inputs for the production of wearable, portable and implantable medical devices designed to compensate for physical impairments, will be exempt from VAT.

 

The Minister further announced that the VAT refund period for businesses operating under the simplified tax regime will be reduced from six months to three months, while the refund period for other businesses will be shortened from six months to four months, helping improve business liquidity.

 

The package also introduces a three-year investment incentive to encourage companies to list on the Egyptian Exchange (EGX), with the objective of increasing market liquidity and attracting further investment.

 

It also replaces the capital gains tax with a stamp duty regime to reduce tax burdens and stimulate investment and trading on the Egyptian Exchange. In addition, the stamp duty applicable to non-resident investors will be revised to promote greater tax fairness between resident and non-resident investors.

 

Kouchouk added that an incentive equivalent to the Central Bank of Egypt’s credit and discount rate will be added to the acquisition cost of unlisted securities held for at least three years before disposal.

 

The reforms also prevent double taxation of dividend distributions among resident holding and subsidiary companies through a single collection mechanism, while increasing the deductible financing costs on loans obtained by companies participating in national infrastructure projects, thereby reducing financing costs and encouraging investment.

 

Furthermore, companies contributing to national infrastructure projects will be exempt from withholding tax on foreign loans and credit facilities.

 

The package also provides for the issuance of a temporary tax card valid for eight months to facilitate business establishment and licensing procedures, in addition to simplifying the write-off of minor debts and reducing procedural burdens on financing companies.

 

The Minister also confirmed that the real estate disposal tax for individuals will remain unchanged at 2.5% of the property's sale value, regardless of the number of transactions, with a full exemption for transfers between spouses, ascendants and descendants.

 

The payment deadline will be extended from 30 to 60 days from the date of the real estate transaction. In addition, the Tax Dispute Settlement Law will be extended until the end of December to facilitate the voluntary settlement of a larger number of tax disputes.