The ETA is gearing up for major reforms: From launching new tax relief packages to finalizing a comprehensive tax law, the Egyptian Tax Authority (ETA) has ambitious plans to streamline tax administration, attract investments, and integrate the informal economy. In an exclusive interview, ETA head Rasha Abdel Aal shares her insights into the authority's plans for 2025.

E: Where do we stand with the announced tax relief packages?

RAA: The primary goal is to foster investment, not just increase tax revenues. The relief packages aim to improve the perception of tax policies among investors and support SMEs by simplifying procedures, resolving disputes amicably, and leveraging the government’s digital capabilities to ease compliance.

E: When will the announced tax relief packages take effect?

RAA: The first phase will roll out this month. These reforms have already gained significant acceptance within the tax community and will be fully implemented by the end of January.

E: Are there more tax relief measures on the way?

RAA: Yes, expect a second package in 2H 2025. Ongoing dialogue with stakeholders has encouraged the tax community to propose additional reforms. The ETA is prioritizing these suggestions and expects to introduce further relief measures alongside the implementation of the first package this year.

E: The business community is often concerned about implementation and procedural challenges. How are you addressing this?

RAA: We’ve taken steps to streamline and standardize implementation processes. The ETA has carefully studied the challenges and is unifying implementation mechanisms to ensure consistency, so taxpayers in Cairo are treated the same as those in other governorates. A high-level committee — led by the ETA head — has been formed to oversee the rollout, along with four specialized teams dedicated to tax relief initiatives.

Phased examinations for different activities are also part of the plan. The initial phase will target less common sectors such as leasing and real estate development, supported by digital transformation to align procedures with broader tax policies. These measures will be announced soon.

E: What’s the status of the tax dispute resolution law?

RAA: We’re making it easier for taxpayers to resolve disputes. A ministerial decree has activated the law, requiring taxpayers to submit requests for dispute resolution via an online platform or by mail. The ETA has allocated six months to review and resolve disputes, urging the tax community to act quickly to benefit from the law.

E: What about incentives for SMEs under the new tax policy?

RAA: This package is a game-changer for Egypt’s business community. It applies to all activities without exception, focusing solely on business size — a groundbreaking feature not present in previous legislation. One of the law’s standout features is the clear handling of all tax bases, giving businesses a transparent framework from the moment they join the system.

Another major benefit is a five-year audit exemption, providing businesses the opportunity to grow. The law’s aim is not to boost tax revenues but to integrate the informal economy, ensuring fairness between compliant and non-compliant taxpayers. Businesses joining the system also get a clean slate, with no liabilities for prior periods. Think of it as your tax birth certificate — your obligations start from day one of joining the system.

E: How does the ETA plan to tackle the informal economy?

RAA: Incentives are on the table for voluntary compliance. Studies estimate the informal economy makes up 50-55% of GDP. We expect the first phase of integration efforts to bring around 100k new taxpayers into the formal fold.

E: Are there additional incentives for small businesses?

RAA: Yes, exceptional revenues won’t disqualify businesses from tax benefits. If a business experiences a one-time revenue spike — such as selling an asset or completing a large transaction — that increases turnover by up to 20% in a single year, it will retain its tax treatment until the end of the five-year period. This measure is designed to encourage growth and ensure businesses aren’t penalized for exceptional circumstances. The ETA will also monitor for potential misuse to prevent manipulation.

E: What’s the plan to reduce the number of entities collecting taxes and fees from investors?

RAA: The goal is to simplify and centralize tax and fee collection. The Investment Ministry aims to ease burdens on investors by improving transparency and removing procedural challenges. While direct taxes are borne by taxpayers, indirect taxes — collected and remitted on their behalf — cannot be included in this consolidation effort.

The finance and investment ministries are working to consolidate the various taxes and fees investors pay to different government entities. These will be streamlined into a single, clear system, making it easier for investors to plan their projects in Egypt. Once collected, the fees will still be distributed internally, but the types of taxes will remain unchanged. The focus is on making the system more transparent to facilitate investment decisions.

A unified tax law is also in the works. For the first time, all tax-related provisions from various laws will be merged into a comprehensive tax law. This includes initiatives like integrating the reduced tax brackets for small enterprises into the tax law, while preserving access to benefits under the Micro, Small and Medium Enterprises Development Agency (MSMEDA). The aim is to prevent surprises for investors who often encounter unexpected fees or taxes after reviewing the primary tax law.

E: Where does Egypt stand regionally on tax rates?

RAA: Egypt’s tax rates are competitive. Studies comparing Egypt to regional peers and countries with similar economic conditions show that tax rates are not a significant hurdle for investors. Procedural and legislative challenges, rather than tax rates, are the primary concerns in this area.

E: Are there changes in VAT or income tax exemptions on the horizon?

RAA: No changes are planned for now. VAT rates and registration thresholds will remain stable, and the ETA is studying the possibility of raising income tax exemptions to ease the burden on low-income earners.

E: Ramping up tax collection rates is a key focus of the ETA reforms. How do you plan to achieve this?

RAA: Our main challenge lies in the tax collection rate relative to GDP. Egypt’s current tax collection rate stands at just 12-12.5%, far below the 21% target we should reach, according to international benchmarks. This gap highlights significant revenue losses. The solution lies in integrating the informal economy, expanding horizontally, and broadening the tax base. These efforts will create a major shift in public revenues, reduce debt burdens, and ease interest payments. International institutions stress that Egypt’s tax-to-GDP ratio should not fall below 17%.

E: Arbitrary tax assessments remain a major challenge for the business community. How are you addressing this?

RAA: We’re working to minimize arbitrary assessments through better risk management. This issue stems from the high volume of files compared to the number of taxpayers. To address this, we’re adopting a risk-based sampling approach for audits. By doing so, we aim to gradually reduce the workload on individual tax officers, ensuring that each case is handled accurately. This will cut down on arbitrary assessments and dry up sources of tax disputes.

E: What’s your strategy for reshaping public awareness around tax compliance?

RAA: We’ve studied global best practices to build a new approach. In countries like Japan — where tax compliance rates exceed 98% — we found that public awareness is deeply tied to education, culture, and enforcement. As a result, we’ve worked with the Education Ministry to include tax law awareness in school curricula. In addition, we’re rebuilding trust with taxpayers by allowing them to amend tax filings from 2020 onward without penalties for the next three years.

E: What’s the status of the government’s electronic integration plans?

RAA: Our roadmap involves connecting with 72 government entities to exchange non-financial information. In the first phase, we’ve targeted integration with 32 entities, 12 of which are already connected. We’ve also achieved partial integration with others. However, the biggest challenge lies in some entities still finalizing their own digital transformation processes.

E: What’s happening with the social solidarity contribution mechanism?

RAA: Currently, it’s calculated based on gross revenues. Shifting the calculation to net profit requires legislative changes, which fall under the purview of the Investment Ministry and the Universal Health Ins. Authority. Once these changes are made, we can adjust the mechanism in time for the next tax filing season.

E: When will the electronic tax systems be fully operational?

RAA: We’ve made substantial progress and aim to complete implementation by the end of 2025. We’ve already processed 1.3 bn documents, with 40 mn new invoices added each month. Last fiscal year, this system helped recover EGP 11 bn in lost tax revenues, and this figure continues to grow as we uncover more fraudulent invoices.

Full implementation of the electronic receipt system is expected by late 2025. The automated tax system currently covers 75% of taxpayers. This year, we’ll expand to other regions, beginning with Alexandria.

The unified payroll tax system has increased payroll tax revenues by 35%, covering over 8 mn employees. The system has also reduced annual disputes between taxpayers and the ETA.

E: Speaking of payroll taxes, will we see an increase in the tax exemption threshold next year?

RAA: This is under review but no decision has been made yet. We’re constantly evaluating the exemption threshold in light of inflation and its impact on lower-income employees. The unified payroll tax system has provided precise data on wage averages and distributions, enabling us to make informed decisions.

E: What revenue target are you setting for the next fiscal year?

RAA: We’re targeting EGP 2.5 tn in tax revenues. This builds on a strong performance in the first quarter of the current fiscal year, where tax revenues grew by 42% y-o-y.

E: Are there any updates on e-commerce and digital platform taxes?

RAA: No legislative changes, but procedural updates are in the works. We’re rolling out a simplified registration system for digital platforms, which will bring bns worth of revenue growth. Sellers on these platforms will be required to provide their tax registration numbers. To ensure compliance, we’ve introduced a mechanism for advertisers to verify the validity of tax registration numbers. Additionally, we’ll monitor online pages and websites conducting sales and combine enforcement with awareness campaigns to promote tax compliance.

E: What about international tax and multinational companies? Are there any plans to revise the current system?

RAA: The current framework remains stable. We’re not looking to impose new taxes or make changes to the existing systems governing multinational corporations at this time.