As part of Egypt’s ongoing efforts to reform its tax system and improve the investment climate, the Ministry of Finance is working on the preparation of the Third Tax Facilitation Package, building on the measures previously introduced under the first and second packages.
The proposed package reflects the government’s continued efforts to simplify tax procedures, reduce compliance burdens on taxpayers, encourage voluntary tax compliance, and address practical challenges facing the business community. It also seeks to enhance the relationship between the Egyptian Tax Authority (ETA) and taxpayers while supporting investment and economic growth.
Several proposals have been raised during discussions involving representatives of the House of Representatives, the Egyptian Tax Authority, tax professionals, and the business community. These proposals aim to identify practical solutions to existing tax challenges and improve the overall efficiency of the tax system.
It is important to clarify that the proposals discussed in this article remain subject to consideration and evaluation. They have not yet been formally approved or enacted into law and should therefore not be regarded as applicable tax measures or established taxpayer entitlements.
Increasing the Annual Personal Income Tax Exemption Threshold to EGP 100,000
One of the key proposals raised in connection with the Third Tax Facilitation Package is increasing the annual personal income tax exemption threshold to EGP 100,000.
This proposal was raised by MP Ashraf Abdel Ghany, Secretary of the Economic Committee at the Senate, during discussions held in September 2026 concerning the proposed package.
The proposal aims to reduce the tax burden on individuals, particularly employees whose income is subject to regular tax deductions, taking into consideration changes in economic conditions, inflation rates, and the increasing cost of living.
Potential Impact: If adopted, this proposal could increase employees’ disposable income and provide additional relief to individual taxpayers. However, its implementation would require appropriate amendments to the relevant provisions of the Income Tax Law and consideration of its interaction with the existing tax brackets and exemptions.
Increasing the VAT Mandatory Registration Threshold to EGP 3 million
Another significant proposal concerns increasing the mandatory VAT registration threshold to EGP 3 million.
The proposal is based on the view that the existing registration threshold has remained unchanged since the issuance of VAT Law No. 67 of 2016, despite substantial economic changes, inflation, and increases in business operating costs.
The proposed increase aims to reduce the administrative and compliance burdens imposed on small businesses, particularly those whose turnover does not justify the costs associated with VAT registration, filing, and related compliance requirements.
Potential Impact: If implemented, the proposed increase could relieve certain small businesses from mandatory VAT registration and reduce their compliance costs. Nevertheless, the proposal would require an assessment of its potential impact on VAT revenues and the scope of businesses subject to registration.
Developing the Tax Sukuk Framework and Introducing Incentives
The proposals also include developing the framework governing tax sukuk and considering incentives that may be linked to the use of proceeds generated from such instruments to settle tax liabilities.
The objective is to make these instruments more attractive to investors by offering competitive returns compared with other available investment and financing alternatives.
This proposal seeks to explore the possibility of linking investment instruments with mechanisms that facilitate the settlement of tax obligations.
Potential Impact: If adopted, this initiative could introduce additional financing opportunities and encourage taxpayers to use the proceeds of such instruments to settle outstanding tax liabilities. Its implementation would require clear rules governing the relevant tax treatment, eligibility conditions, and applicable incentives.
Allowing Full Tax Deductibility of Cash and In-Kind Donations
Another proposal involves reconsidering the tax treatment of donations by allowing the full deduction of cash and in-kind donations from the taxable base, rather than applying the limitations and conditions currently prescribed under the tax legislation.
The proposal aims to encourage companies and institutions to increase their contributions to corporate social responsibility initiatives and support charitable and development activities.
It also reflects an intention to strengthen the role of the private sector in addressing social needs and supporting sustainable development.
Potential Impact: If approved, the proposal could encourage greater corporate contributions to charitable and social initiatives. However, its implementation would require clear rules concerning eligible recipients, supporting documentation, valuation of in-kind donations, and the applicable conditions for tax deductibility.
Promoting competitive neutrality is another important area raised in the context of tax and economic reform.
The underlying objective is to create a fairer competitive environment by addressing unjustified preferential treatment between state-owned enterprises and private-sector companies, thereby ensuring a more level playing field among economic entities.
The proposal emphasizes the importance of applying consistent rules and standards to comparable economic activities and avoiding competitive advantages that may distort market competition.
Potential Impact: Greater competitive neutrality could improve market efficiency, strengthen investor confidence, and enhance the attractiveness of the Egyptian market to both domestic and foreign investors.
Strengthening the Role of Tax Accountants
The proposals also highlight the importance of developing and strengthening the role of tax accountants within the Egyptian tax system.
This proposal comes amid the continuous development of tax legislation, the expansion of electronic tax systems, and the increasing complexity of tax compliance requirements.
Tax accountants play an essential role in supporting taxpayers, preparing accurate tax returns, ensuring compliance with applicable legislation, and facilitating communication with the Egyptian Tax Authority.
Potential Impact: Strengthening the professional role of tax accountants could improve the quality of tax reporting, reduce compliance errors, and promote more effective cooperation between taxpayers and the tax administration.
Settling Outstanding Tax Matters and Addressing Tax Distortions
In addition to the six proposals discussed above, press reports citing government sources have indicated that the Third Tax Facilitation Package may also address outstanding tax matters and unresolved issues facing taxpayers.
Other areas reportedly under consideration include reviewing tax distortions affecting different economic sectors and introducing measures to encourage businesses operating within the informal economy to join the formal tax system.
These potential initiatives reflect a broader objective of addressing existing compliance challenges, expanding the tax base, and creating a more supportive environment for businesses.
However, the specific mechanisms, eligibility criteria, and implementation procedures relating to these matters have not yet been formally announced.
The Position of the Ministry of Finance and the Egyptian Tax Authority
The Ministry of Finance has confirmed that work is underway to prepare the Third Tax Facilitation Package as part of its broader strategy to improve the tax environment, simplify procedures, and strengthen confidence within the business community.
Furthermore, during discussions held in September 2026, the Head of the Egyptian Tax Authority, Rasha Abdel Aal, indicated that proposals from the tax community were being considered as part of the preparation process, with contributions welcomed from businesses, tax professionals, and other relevant stakeholders.
Subsequent statements in November 2026 also confirmed that preparations for the package were ongoing.
Accordingly, the proposals outlined above should be understood as recommendations and potential policy measures under consideration, rather than approved decisions or amendments issued by the Ministry of Finance or the Egyptian Tax Authority.
Conclusion
The proposals being discussed in connection with Egypt’s Third Tax Facilitation Package reflect an important opportunity to address several structural and practical challenges within the country’s tax system.
Beyond simplifying tax procedures, the proposals seek to reconsider certain aspects of the existing tax framework, including personal income tax exemptions, VAT registration thresholds, donation deductibility, competitive neutrality, and the professional role of tax accountants.
The significance of these proposals lies in their potential to reduce compliance burdens, improve tax fairness, encourage investment, and strengthen the relationship between taxpayers and the tax administration.
Ultimately, the success of the Third Tax Facilitation Package will depend on its ability to address the practical concerns of taxpayers while maintaining an appropriate balance between government revenue objectives, investment incentives, and the creation of a more transparent, predictable, and business-friendly tax environment.
Frequently Asked Questions
What is Egypt’s Third Tax Facilitation Package?
+
Egypt’s Third Tax Facilitation Package is a proposed set
of tax reforms being prepared by the Ministry of Finance
to simplify tax procedures, reduce compliance burdens,
encourage voluntary compliance and improve the
investment environment. The proposals address several
areas, including personal income tax exemptions,
VAT registration, tax sukuk, donation deductibility,
competitive neutrality and the role of tax accountants.
The measures discussed remain under consideration
and have not yet been formally approved or enacted
into law.
Will Egypt increase the personal income tax exemption to EGP 100,000?
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One proposal under discussion involves increasing
the annual personal income tax exemption threshold
to EGP 100,000. The proposed increase aims to reduce
the tax burden on individuals, particularly employees,
in light of inflation and rising living costs.
If implemented, it could increase disposable income
and provide additional tax relief. However, the
proposal has not been approved and would require
amendments to the relevant provisions of the
Income Tax Law.
Is Egypt planning to increase the VAT registration threshold to EGP 3 million?
+
A proposal has been raised to increase Egypt’s
mandatory VAT registration threshold to EGP 3 million.
The objective is to reduce administrative and tax
compliance costs for smaller businesses, particularly
in light of inflation and increased operating expenses.
If adopted, the measure could reduce the number of
businesses required to register for VAT. However,
the proposed threshold remains under consideration
and is not yet an applicable legal requirement.
What changes are proposed for tax sukuk under the Third Tax Facilitation Package?
+
The proposals include developing the framework
governing tax sukuk and considering incentives
linked to using proceeds from these instruments
to settle outstanding tax liabilities.
The objective is to make such instruments more
attractive to investors by offering competitive
returns and additional financing opportunities.
Implementation would require clear rules governing
tax treatment, eligibility conditions and
applicable incentives. No final framework
has been formally announced.
Will cash and in-kind donations become fully tax-deductible in Egypt?
+
One proposal involves allowing the full deduction
of cash and in-kind donations from the taxable
base instead of applying the existing statutory
limitations and conditions. The proposed measure
aims to encourage corporate social responsibility,
charitable contributions and development initiatives.
If approved, implementation would require rules
concerning eligible recipients, supporting
documentation and the valuation of in-kind donations.
Full deductibility has not yet been enacted.
How could the Third Tax Facilitation Package improve tax fairness and compliance?
+
The proposals seek to strengthen competitive
neutrality by addressing unjustified differences
in treatment between state-owned enterprises
and private-sector companies. They also highlight
the importance of strengthening the role of tax
accountants in improving reporting accuracy
and supporting taxpayer compliance.
Additional areas reportedly under consideration
include settling outstanding tax matters,
addressing tax distortions across economic sectors
and encouraging businesses in the informal economy
to enter the formal tax system.
These initiatives could improve tax fairness,
reduce compliance challenges and strengthen
investor confidence. However, their specific
mechanisms and implementation procedures have
not yet been formally announced.
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