The tax policy document could be just months away: The Finance Ministry is currently reviewing its long-awaited tax policy document, with a plan to release it for public discussion in 4Q 2025, a senior government official told EnterpriseAM. Officials have long said the framework would offer business a clear roadmap for future policies and set guidelines for the modernization of the tax system.

In principle, that’s smart policy: Finance Minister Ahmed Kouchouk has noted in the past that certainty of tax policy is among the keys to unlocking fresh investment, both foreign and domestic.

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No fresh taxes on the horizon: The current draft makes clear the Madbouly government is not looking to impose new taxes in the short term, leaving unchanged the current 22.5% corporate income tax (a figure it describes as “competitive” relative to other tax rates in our region), while the income tax on individuals will still top out at 27.5%. The value-added tax will remain unchanged at 14% outside of a list of goods and services taxed at a lower rate.

Among the Finance Ministry’s top priorities: Widening the tax base and creating a more efficient tax system.

We could see a 15% minimum corporate tax — in line with global calls: The document also indicates the Finance Ministry is actively reviewing its stance the OECD-G20 Pillar Two rule, which aims to set the global minimum corporate tax rate at 15% for multinational companies, regardless of where they operate. The document stops short a final decision, but notes that imposing a 15% minimum corporate tax would curb the efficiency of existing tax exemptions granted to some foreign companies in Egypt. Either way, the 15% tax would likely need approval from the House of Representatives.

No new tax breaks or exemptions: Introducing new systems and expanding tax incentives risks distorting markets and driving up tax compliance costs, the document notes — so don’t expect much in this vein.

The ministry wants to see tax revenues grow an average of 38% each year in the medium-term. Finance Minister Ahmed Kouchouk recently said that tax revenues grew 35% y-o-y during the fiscal year 2024-2025 — without tax hikes or new levies.

A nod to the challenges businesses face: High inflation and interest rates pose key challenges to business and, by extension, the tax system by making investment more expensive.

CONTEXT- Inflation is on a declining path- Deutsche Bank sees headline inflation here averaging 15-16% in 2025 before declining to 10% in 2026. The IMF expects inflation to reach 15.3% on average during FY 2025-2026, before cooling down to 10.7% on average in the upcoming fiscal year.

So, too, are interest rates: Goldman Sachs expects the CBE to cut interest rates by 400 bps in 4Q this year. Deutsche Bank has pencilled in a total of 725 bps of rate cuts in 2025. Both see the policy rate touching 20% by year’s end. The CBE left rates unchanged at last month’s monetary policy meeting. The bank will next review rates at the end of this month.

New strategy to streamline tax system, boost transparency: The document details strategic reforms to simplify tax filings, scrap estimated assessments and filings without documentation, and adopt a new rating system for taxpayers based on their compliance levels.

Businesses with employees who are being squeezed by inflation could get a break: The ministry will regularly raising the ceiling on the zero-tax personal income bracket to ensure fairness. The bracket will be adjusted semi-annually in times of high inflation and annually under normal conditions, aiming to curb the tax burden on lower-income households. The plan would see higher income brackets changed in parallel (without changing their tax rates).

REMEMBER- The government is looking to secure an additional EGP 195.2 bn in tax revenues — equivalent to 0.98% of GDP — in FY 2025-2026 through a bundle of tax reforms, the IMF said last month. To put the target in perspective, the government expects to generate some EGP 200 bn in tax revenues this fiscal year, meaning the reforms are expected to nearly double the pool. These reforms — some of which have already been rolled out — include amendments to the VAT Law.

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