SMART POLICY- The Finance Ministry is looking to lure investors with tax incentives — and to make domestic businesses happy with policy stability —under a new, five-year tax policy framework now in the works. The first draft is complete and it could be finalized and ready for public review as early as next month, a ministry official told Enterprise. The tax reform plan is currently in legal review and will be put to the business community for feedback.

Stability in tax policy and alongside clear incentives are the name of the game: The new policy aims to reassure investors and promote investment, our ministry source told us. Here’s a rundown of what we know about the draft policy so far:

  • Fixed, much lower rates ensure stability for foreign investors: A fix 5% wage tax rate and 10% tax on commercial profits will be used in special economic zones, replacing the previous 22.5% corporate income tax rate;
  • Tax deductions for new projects: Some investors will be able to claim tax deductions of 30% to 50% of spending on new projects, with the scale sliding depending on the size of the investment;
  • Modernization overhaul:The proposed tax policy will keep up to date with developments in modern tax systems and technological advancements in the economy at large, we’re told.

REMEMBER- Tax policy changes, including adjusting excise duties and simplifying value-added tax, are on the Madbouly government’s agenda as part of its commitments to the IMF under its USD 3 bn loan agreement. The state has been working to drum up more investment after 2022 saw almost USD 20 bn in outflows as rising interest rates around the world and soaring inflation triggered a global risk-off and sent Egypt’s real interest rate into negative territory.

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