The government is out with a guide to its new tax reforms: The Finance Ministry has issued a guide (pdf) clarifying the eligibility criteria, obligations, and penalties under the newly approved tax code as well as the dispute-resolution mechanism that it outlines. The guide also includes an FAQ and commentary from leading business figures.

REMEMBER- It’s all part of a push by the Finance Ministry to widen the tax base. President Abdel Fattah El Sisi in February signed three laws introducing measures designed to make it easier for small businesses to pay taxes as well as simplified procedures for filing and dispute settlement. We first heard about the laws in October 2024 when Finance Minister Ahmed Kouchouk announced a long list of tax reforms.

How much tax will SMEs have to pay under the new system? Small businesses will be taxed on their turnover, eliminating arguments with tax inspectors over expenses. The rates are as follows:

  • 0.4% for companies with annual revenues below EGP 500k;
  • 0.5% for those between EGP 500k and less than EGP 1 mn;
  • 0.75% for revenues between EGP 1 mn and less than EGP 2 mn;
  • 1.0% for revenues between EGP 2 mn and less than EGP 3 mn;
  • 1.25% for revenues between EGP 3 mn and less than EGP 10 mn;
  • 1.5% for revenues between EGP 10 mn and less than EGP 20 mn.

How can SMEs qualify for the new tax breaks? To benefit from the new rates, companies with revenues of up to EGP 20 mn will need to file a request, meet deadlines for submitting tax returns, and join the government’s digital systems, including the e-invoicing and e-receipt systems. The Tax Authority will have deadlines for each phase of the rollout.

A fresh start for non-filers — but with conditions: SMEs will need to register and remit income tax, VAT, stamp tax, and development fees retroactive only to 13 February 2025. Any business that meets the threshold to collect and remit VAT will need to register to pay income tax and VAT within three months of that date. They’ll also need to go online to file all the usual documentation through the government’s digital platforms by the dates the Finance Ministry hands down.

Crossing the EGP 20 mn barrier won’t mean you’re automatically kicked up into a new tax system. The Finance Ministry is signaling it understands business can be cyclical: Companies that enrol in the simplified SME tax regime won’t automatically get kicked into the standard system if their annual revenues go above the EGP 20 mn cutoff. Any business can go over the threshold by up to 20% once in a five year period and be subject only to a 1.5% tax on the revenues above the EGP 20 mn limit.

Not everyone qualifies for the new system: The simplified SME system excludes professional consulting firms that generate 90% or more of their revenues from just one or two clients — unless they secure a special exemption from the Finance Ministry. Companies that artificially split operations to qualify for the system are also ineligible, with the burden of proof resting on the Tax Authority.

BREAKS FOR COMPANIES OF ALL SIZES

All late-filers get a pass — for now: Businesses of all sizes that missed filing their tax returns for the 2020-2024 tax seasons can submit them without facing penalties or fines — as long as they file between 13 February 2025 and 8 August 2025. Anyone who made errors or omissions in previously submitted returns can also amend their filings in the same window without incurring late penalties or additional taxes, provided the corrected filings are submitted by 12 August 2025.

New options to settle old disputes: The Finance Ministry is also rolling out measures to make it more attractive for businesses to settle disputes dating to before 2020, including by paying a fixed percentage of taxes owed. Businesses will be able to make those payments in four installments over a 12-month period without paying late fees or additional interest charges.

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