Egypt launches tax facilitation measures to boost investment

RIYADH: Egypt has unveiled the “first step” in a new tax facilitation package to enhance investor relations and address economic challenges. 

The announcement, made by Finance Minister Ahmed Kouchouk, will see the introduction of measures designed to streamline the tax system, boost productivity, and foster growth through increased production and exports. 

This follows the earlier announcement by his predecessor in the post, Mohamed Maait, who revealed in January that the tax authority is close to completing a new draft income tax law. 

Speaking at a press conference attended by Prime Minister Mostafa Madbouly, Kouchouk said that a simplified and integrated tax system will be implemented for businesses with annual revenues of up to 15 million Egyptian pounds ($309,525), covering small and micro enterprises, startups, freelancers, and professionals. 

“We have started studying the challenges on the ground, and our decisions reflect our seriousness in meeting the needs of our partners in the tax community,” he said, adding: “We are continuing the ‘tax hearings’ and moving immediately with other packages of facilitations to stimulate the business community, with a focus on clarifying and defining the procedures and executive rules decisively so that we do not leave matters to personal estimates in the tax regions and offices,” Kouchouk said.

“We are targeting a tangible improvement felt by the business community in the quality of tax services provided to them in the tax regions and offices,” he added, according to a post on the prime minister’s Facebook page. 

The minister of finance described the announcement as “the beginning of a new page” between the tax authority and the business community. 

“We confirm that the partnership is rooted in trust between all parties and that we will focus on the future, not the past, we will provide fair and distinguished service to investors and financiers, we will focus on expanding the tax base, and this ensures the interests of the state and investors and the ability to improve support and services for citizens,” he said. 

Efforts will be made to integrate informal economic projects into the formal sector using various facilitation techniques. Taxpayers can submit or amend returns for 2021 to 2023 without facing penalties. 

Kouchouk said that tax returns will be simplified and that the sample inspection system will be expanded to include all tax centers. 
Tax audits will now use a risk management system for all taxpayers across offices and regions to streamline processes. 

Previously, penalties for delays could exceed the original tax amount several times. Now, a cap has been set so penalties will not exceed the original tax amount under any circumstances, he said. 

The minister added that efforts will be made to expedite dispute resolution and clear accumulated tax files to boost economic activity, while the exemption threshold for “transfer pricing studies” for international companies will also be increased to 30 million Egyptian pounds. 

He also said the introduction of a new centralized settlement mechanism and a simplified value-added tax refund system would ease the burden on investors and create a competitive, investment-friendly environment. 

The initiative aims to support the North African country’s efforts to maximize production and export capabilities, and the tax relief package includes a graduated legal handling principle for the non-submission of tax returns, linked to annual turnover, benefiting taxpayers. 

“There will be a serious investment in enhancing the efficiency of the employees at the Egyptian Tax Authority and improving their conditions in line with the burdens and responsibilities required of them,” Kouchouk said. 

He also mentioned that a modern, integrated system will be introduced to evaluate employees based on performance metrics and the quality of services provided to taxpayers. 

“We in the Ministry of Finance and the Egyptian Tax Authority are a unified and harmonious team that believes in this direction, as reflected in the first tax relief package,” the minister said.