Egypt's Senate economic committee has introduced a third round of tax relief proposals to mitigate inflation . These measures,presented during a consultation by the ATC Financial and Tax Consultancy Group, aim to protect both salaried workers and small businesses.
Adjusting the 2016 VAT threshold to EGP 3 million
A central pillar of the proposal involves a significant update to how value-added tax is applied to small enterprises. The current VAT registration threshold has remained unchanged since the original law was issued in 2016. However, as the report notes, massive shifts in exchange rates and high inflation have fundamentally altered the economic landscape since that time.
By raising the threshold to at least EGP 3 million, the committee hopes to prevent small businesses from being forced into the VAT system simply because their nominal turnover has increased due to inflation. this move is intended to be a structural correction rather than a simple tax cut, ensuring that businesses are taxed based on real economic expansion rather than the eroding value of the currency.
Aligning the EGP 100,000 exemption with EGP 8,000 wages
To protect the purchasing power of the workforce, the proposed package seeks to link income tax exemptions directly to current wage standards. Specifically, the proposal suggests an annual income tax exemption of EGP 100,000 to correspond with the recently increased monthly minimum wage of EGP 8,000. This strategy is designed to ensure that the rise in minimum wages does not inadvertently push more employees into higher, taxable brackets .
Abdel Ghani, representing the ATC Financial and Tax Consultancy Group, highlighted that salaried employees are among the most compliant categories of taxpayers. According to the report, this alignment serves as a direct response to the economic pressures facing the most consistent contributors to the national tax base.
Activating competitive neutrality for private businesses
The proposal also includes a push to activate the competitive neutrality law , a move that could reshape the Egyptian marketplace. this law is intended to create a level playing field between state-owned enterprises and private companies. If implemented, it would impact how these entities compete in areas such as procurement, market access, and pricing.
Rasha Abdel Aal, Secretary of the Economic Affairs Committee in the Senate, emphasized that competitive neutrality is a broader state direction that aligns with international agreements Egypt has already signed. This effort comes as the government seeks to formalize the economy, a trend that has already seen approximately one million new taxpayers join the formal sector,contributing to tax revenues that reached about EGP 2.59 trillion.
Unresolved details on sukuk incentives and accountant roles
While the framework for the third relief package is taking shape, several specific components remain unverified and subject to the ongoing consultation process. It is currently unclear how the Tax Authority will implement the proposed tax incentives for using sukuk proceeds to settle liabilities, or how the full deduction of charitable donations will be structured.
Furthermore, there are lingering questions regarding the specific role tax accountants will play within the new digitalized system.. While the Tax Authority has begun receiving proposals, the final definitions and the offiicial enactment of these measures—including the EGP 3 million VAT threshold—remain pending.
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