Tax reforms launched by Egypt to entice more investors

Reuters/Amr Abdallah Dalsh

• Reforms to ‘boost competitiveness’
• New tax advice body set up
• No news on capital gains tax

A range of measures to make the Egyptian tax system more transparent and attract further investors to the country has been unveiled by finance minister Ahmed Kouchouk.

The reforms will boost the country’s competitiveness and make it easier for foreign investors to work there, Kouchouk said in a press conference on Wednesday. 

“It’s evident that new investors arriving now want some foresight,” he told reporters. 

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“They want to know before they come to work in Egypt what they need to do exactly. What are their rights, what are their commitments, what incentives are on offer?”.

Among the reforms Kouchouk announced was the establishment of a new body to provide detailed information on tax obligations to local and foreign investors before they make any new investments.

Kouchouk also announced the simplification of tax returns, a graduation of late-payment penalties, and a cap to prevent penalties from exceeding the original amount due. The process for refunding value added tax to foreign investors will also become easier, he said.

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Standardisation of taxes across different jurisdictions and a simplified and integrated tax system for small and micro-businesses, including individuals and freelancers with annual revenues under EGP 15 million ($310,000), were also promised.

The minister did not address speculation that he plans to scrap the proposed capital gains tax. The 10 percent capital gains tax on investments on the Egyptian stock exchange had been introduced in July 2014 but has since been suspended, despite pressure from the International Monetary Fund to reinstate it.

According to reports in the local press, Kouchouk opposes its reinstatement.

Kouchouk was made finance minister in a reshuffle at the beginning of the current financial year, in July, an appointment that was widely welcomed by markets.

The International Monetary Fund is pressing Egypt to raise tax revenue. Kouchouk has said that he does not intend to raise taxes, but he has expressed support for widening the tax base.

He is scheduled to announce more tax reforms next week and is expected to release measures to extend tax collection within the informal economy.

Egypt aims to treble foreign direct investment into the country from the record $10 billion of inflows recorded in 2022-23.