The Finance Ministry is weighing a one-to-two-year extension of the property tax exemption for some 20 manufacturing sectors, a senior government official tells EnterpriseAM. The current grace period, where the state foots the EGP 3.3 bn annual tax bill for manufacturers, is set to expire this month. A decision is being studied to avoid a ‘sudden fiscal shock’ to manufacturers. Policymakers see manufacturing as a cornerstone of both currency stability and GDP growth, the source added.

Why it matters: The move suggests policymakers are working in tandem. If true, it’s an important signal for the private sector. The Central Bank of Egypt has made clear it’s moving forward with its easing cycle. The hope is that interest rates get low enough that it makes sense for domestic businesses to borrow — in EGP — to fund capital expenditures. The Finance Ministry wants to make sure that manufacturers have the cashflows they need to allow them to take on and service debt instead of having it sucked up by tax burdens, the source says.

Does that mean the exemption is here to stay? While manufacturers are lobbying for a permanent exemption, our source says it’s not in the cards: Giving makers of things a permanent break wouldn’t survive legal review, he says.

More good news for industry: A parallel committee is studying how property tax collection will work once the temporary exemption ends, including resolving issues around open land surrounding factories and establishing clear mechanisms for application and compliance. Factories may also benefit from debt settlement facilities and a cap on late-payment penalties at 100% of the original tax owed.

The big picture: This shift moves in tandem with discussions in the Senate to amend the Property Tax Law. Those amendments aim to raise the exemption threshold to account for inflation and the spike in property valuations, while pushing for digital transformation and lower penalties.

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