FinMin’s finalizes draft tax reforms targeting EGP 900 bn revenue boost

The Finance Ministry finalized draft income tax amendments aiming to add EGP 900 bn to state revenues in FY 2026/27, according to three government officials and a draft law seen by EnterpriseAM. The bill attempts to encourage EGX listings and infrastructure financing by easing the tax burden on businesses and investors while simultaneously tightening rules around delisting and pulling daily market activity into the stamp tax net.

The draft law scraps the long-delayed capital gains tax on EGX-listed shares, replacing it with a stamp tax. However, as an anti-evasion measure, capital gains will still be taxed at 10% if a transaction results in a company being delisted from the bourse. The draft also drops all capital gains tax claims on listed securities dating back to June 2023 to avoid a legislative gap during which there was no law governing the tax.

A new carrot for IPOs

Confirming our report from March, companies that float on the EGX will receive a 15% deduction from income tax due for three years. This simplifies the tiered scheme we reported on in May — which offered a 30% reduction in year one, 20% in year two, and 10% in year three — by opting for a straight 15% average instead.

Companies must either have a fair-value market cap of at least EGP 50 bn (floating at least 20% of shares) or offer shares worth at least EGP 10 bn to qualify. The measure should encourage large companies to list on the EGX and generate wider economic returns for the state, Egyptian Tax Authority advisor Ragab Mahrous tells EnterpriseAM. The incentive would be granted only once during a company’s lifetime, though the finance minister could extend it for another three-year period.

You heard it here first: A senior government official told us in March that the Finance Ministry was preparing a new incentive scheme that will offer tiered corporate income tax reductions over three years to companies that list on the EGX. The incentive will benefit both private and public companies, which should improve the runway for the state-owned enterprises that the government is looking to list or exit as part of its plan to generate USD 3-4 bn in divestment revenues by year-end.

Borrowing relief and better tax math

When selling unlisted securities, taxpayers will be allowed to add the equivalent of the CBE’s credit and discount rate — currently standing at 19.50% — to their acquisition cost for every year they hold the shares. This mechanism accounts for inflation, reduces the final taxable gain, and encourages shareholders to disclose the true value of their transactions, Mahrous notes.

Holding companies get dividend relief: Resident holding companies will be fully exempt from taxes on dividends received from both resident and non-resident subsidiaries. To qualify, the parent company must own at least 25% of the subsidiary’s capital or voting rights and have held that stake (or commit to holding it) for at least two years.

Public and private Egyptian companies contributing to national infrastructure projects will be exempt from the tax cap on deducting interest paid on loans and credit facilities. Eligibility will be determined by a prime ministerial decree, and the exemption will expire once the project’s core loans mature. This should make it easier for companies working on national infrastructure projects to secure financing from international financial institutions, Mahrous says.

A clean up job

The draft applies a unified 2.5% tax rate to multiple property disposals, entirely exempting property transfers between first-degree relatives. It also makes writing off bad debt easier by setting a EGP 5k threshold per debt that is exempt from the usual regulatory collection procedures. As we heard in March, the draft also cancels the practice of arbitrary tax assessments, removing a long-running source of uncertainty for businesses.

The package is meant to pay for itself: The Finance Ministry is targeting EGP 3.5 tn in total tax revenues in the coming fiscal year, with a medium-term target of EGP 5.5 tn. The EGP 900 bn in newly targeted receipts will be driven largely by the proportional EGX stamp tax. Additional revenues will be generated by a 0.25 per mille tax on same-day trading, increasing the Finance Ministry’s share of state-owned company income (expected to yield EGP 37.5-42 bn) and implementing higher departure fees (expected to generate EGP 30 bn).

What’s next: The tax amendments are currently before the House, as the government pushes to secure parliamentary approval ahead of a planned July rollout.