Tax sukuk pilot runs through banks this month as the bourse waits for 2027

The Finance Ministry will launch Egypt’s first tax-backed sukuk this month as a pilot issuance. Subscriptions will be submitted through commercial banks, and trading on the EGX is expected in the second half of 2027, Mae Adel, the finance minister’s deputy for public debt management, tells EnterpriseAM. The ministry settled on a trial issue to “gauge investor appetite” rather than a full launch.

How it works: Taxpayers subscribe at bank branches, then the banks subscribe on their behalf, and the ministry issues to and redeems directly with the banks, with the central bank and the EGX involved, as we reported yesterday. Every subscriber gets an international securities identification number (ISIN) from the start, and the sukuk will not be tradable on the bourse at launch.

Why the bourse is waiting: Adel says the phases were split so the operating system could be tested before the certificates pass between investors. She expects secondary-market trading on the exchange in the second half of next year, once the fintech system that handles transfers of ownership has been tested and shown to move them safely.

The short tenor is about the budget: The pilot runs for six months, Adel says, and short maturities were chosen to align with the April filing season. The tenor will be reviewed once the first issue succeeds. Keeping both the maturity and the return inside the same fiscal year is meant to avoid loading later years’ tax receipts with financing costs and to protect the budget’s primary surplus target. Maturities track the filing calendar, with the individual tranche maturing in March and the corporate issue in April.

As for what you earn: The return is taxfree and floating, set at the central bank’s average deposit rate over the holding period minus one percentage point (about 19% against October’s 20% deposit rate) and paid at maturity. Taxpayers can redeem early, in full or in part, and keep the taxfree return for the period they actually held the instrument. The sukuk’s value and its accrued returns settle the taxes due.

Who qualifies: Access is limited to taxpayers who have filed income tax returns, payroll forms, and withholding filings in each of the last three fiscal years and are enrolled in the digital tax systems (e-invoicing, e-receipts, the unified payroll tax base, and the core tax system). They must also have a clean record with no tax-evasion convictions, no dealings with shell companies, and no unpaid income tax or arrears. Subscriptions are capped at 20-25% of the previous year’s tax bill.

REMEMBER- The first issue was meant to be far larger. We reported in August a target of EGP 50-100 bn and in late September that subscriptions were expected to open in November at around EGP 50 bn, capped at EGP 100 bn on a one-year tenor. Adel says the pilot’s target sits well below that, without giving a figure. The instrument itself rests on Article 115 of the income tax law, unused since 2005, which lets the minister issue tax sukuk carrying a tax-exempt return they set, with the force of discharge in settling the taxes due. It was built for a treasury that funds most of FY 2026/27 at home and wants tax receipts spread across the year.