Egypt’s Tax Reforms: Boosting Business Confidence and Export Growth

Egypt’s tax reforms and export incentives aim to boost business confidence, encourage the private sector, attract investments, achieve higher localization in industries, and drive overall economic growth.

Egypt’s Minister of Finance, Ahmed Kouchouk, has revealed a raft of reforms aimed at improving the country’s tax system, fostering business growth, and positioning the country as a key player in the global export market. These initiatives, set to be rolled out by the end of the current fiscal year, promise to usher in a new era of transparency, trust, and collaboration between the Egyptian government and the business community.

A new era of tax reform

Kouchouk’s announcement of significant tax service improvements has been met with enthusiasm from Egypt’s business community, signaling a government commitment to creating a more predictable and supportive environment for businesses. During a recent speech to the parliamentary bloc of the Republican People’s Party in Egypt’s New Administrative Capital, Kouchouk outlined a range of reforms designed to modernize Egypt’s tax system.

One of the key measures is the reinstatement of sample audits for all taxpayers, which will help to ensure a fairer and more transparent approach to tax administration. These audits aim to promote trust in the system by increasing accountability and giving businesses a clearer understanding of their tax obligations. Additionally, the government has launched a pilot version of the Centralized Electronic Clearing System, which will allow businesses to offset government dues with receivables. This new system is expected to alleviate financial pressures and enhance liquidity, making it easier for businesses to manage cash flow.

In his remarks, Kouchouk also stressed the government’s intention to gradually integrate Egypt’s informal economy into the formal sector. He noted that improved tax practices and targeted support for businesses—whether small, medium, or large—will play a central role in this process. Ultimately, the goal is to create an environment in which businesses can achieve strong profits within a framework of clear rights and obligations, fostering a productive partnership between the private sector and the Tax Authority.

Focus on private sector growth

The private sector remains a cornerstone of Egypt’s economic growth strategy. Kouchouk emphasized that the government is committed to supporting businesses and investment in the country. In collaboration with the Minister of Investment and Foreign Trade, efforts are underway to reduce fees, streamline tax collections, and improve relations with investors. These efforts are expected to attract both domestic and international businesses, with particular emphasis on public-private partnerships (PPP) in key sectors such as renewable energy and services.

The government’s shift toward PPPs is aimed at reducing public sector investment while encouraging private sector involvement. This approach is aligned with broader economic objectives, including the growth of the renewable energy sector and the diversification of Egypt’s economy. Kouchouk noted that the increased demand for PPP projects is a clear sign of the private sector’s growing role in shaping Egypt’s economic future.

Additionally, the government is focusing on increasing investments in education and social protection, recognizing the importance of human development in driving long-term economic stability. Kouchouk underscored the importance of developing productive sectors, with special attention to fostering a thriving entrepreneurship ecosystem. This, combined with the government’s focus on digital exports, is expected to unlock new growth potential for Egypt’s IT services sector.

Export growth and incentives

In parallel to these tax reforms, Egypt is taking ambitious steps to boost its export sector. Prime Minister Mostafa Madbouly recently highlighted the importance of the Export Reimbursement Programme, which aims to streamline export procedures and offer new incentives for localizing industries. At a Cabinet meeting attended by key ministers, including Kouchouk, the government outlined its strategy for achieving the ambitious goal of doubling exports in targeted sectors. The Export Reimbursement Programme, which began in July 2023, is set to run until June 2025, with a series of measures designed to incentivize Egyptian businesses to expand their reach in regional and global markets.

Push for localization

One of the most notable aspects of the program is its emphasis on localizing industries that are not currently present in Egypt but are crucial for the domestic market. By attracting these industries, the government hopes to reduce Egypt’s reliance on imports and strengthen its manufacturing base. The program will also prioritize exports with higher added value, ensuring that Egypt’s businesses are well-positioned to compete in global markets.

Madbouly emphasized the need to ensure timely payments to exporters, stating that building trust with the export community is essential for the success of the program. The government is also taking steps to automate the Export Reimbursement Programme, with the first phase of automation launched in August 2024. This phase includes the registration of exporting companies and the electronic submission of support disbursement requests, making the program more efficient and accessible.

To further support Egypt’s export growth, the government has raised the minimum percentage of local content required for exports benefiting from the program to 35 percent, with plans to increase this proportion over time. This initiative is expected to encourage businesses to source more materials locally, boosting Egypt’s domestic production and creating new opportunities for local suppliers.

Strengthening Egypt’s business environment

Beyond specific tax and export-related reforms, the government is focused on strengthening Egypt’s broader business environment. Kouchouk discussed ongoing efforts to revise administrative decisions, a key initiative aimed at improving Egypt’s investment climate. This move reflects the government’s recognition of the private sector’s potential to drive economic growth and its commitment to reducing bureaucratic barriers to business.

In addition to tax reforms, Kouchouk noted that the government is simplifying customs and property tax procedures to make it easier for businesses to operate in Egypt. These changes are part of a broader effort to streamline administrative processes and reduce the cost of doing business in the country.

The government is also focused on improving investor relations, with efforts to reduce fees and simplify the collection of taxes and other obligations. These measures are expected to create a more predictable and stable business environment, which is essential for attracting both domestic and foreign investment.

A roadmap for the future

Kouchouk’s remarks underscore Egypt’s commitment to creating a business-friendly environment that encourages investment, innovation, and economic growth. By introducing tax reforms, fostering public-private partnerships, and supporting export growth, the government is laying the groundwork for a more prosperous future. These reforms are also in line with the government’s broader goal of diversifying the economy and reducing reliance on imports by localizing industries and supporting entrepreneurship.

The government’s focus on a transparent tax system, coupled with its efforts to increase exports and foster private sector growth, signals a new era for Egypt’s economy. As the reforms take shape in the coming months, businesses and investors can expect a more stable, predictable, and supportive environment in which to operate. With these bold steps, Egypt is positioning itself as a key player in the regional and global economy, with a growing focus on innovation, sustainability, and long-term economic growth.

In conclusion, Egypt’s reforms are more than just a response to current challenges—they are part of a comprehensive strategy to build a competitive, sustainable, and thriving economy. By fostering collaboration between the government and the private sector, Egypt is creating the foundation for a brighter economic future.

• Previous Article UAE’s New National Investment Strategy 2031: Key Sector Prospects
• Next Article Qatarisation Law No. 12/2024: Implications for Qatar’s Construction Sector and Private Enterprises