As part of the Egyptian state’s efforts to reform the tax system and enhance voluntary compliance, the government issued Law No. 5 of 2025 in February 2025, a pivotal step within a comprehensive tax reform program. This program aims to achieve tax efficiency and fairness, improve the relationship between the tax administration and taxpayers, address the accumulation of disputes that have persisted for years and led to the freezing of billions of pounds, in addition to significant administrative and judicial burdens.
At the same time, Law No. 6 of 2025 was issued to complement this vision by introducing a simplified tax system and providing technical and technological support for small and micro enterprises, with the goal of integrating the informal economy into the formal system and stimulating investment and growth. This legislative package is the most extensive of its kind in Egypt’s history, offering taxpayers an exceptional opportunity to regularize their status before moving into a new phase of strict enforcement of obligations.
Context and Drivers
Law No. 5 of 2025 was enacted in response to the urgent need to address chronic structural problems in the tax system. The main drivers for its issuance included the desire to resolve the accumulation of tax disputes, as tax offices and courts were overwhelmed with pending disputes, leading to delays in resolution and prolonged procedures. The law established a fast mechanism for settlement through exemptions and facilities in exchange for payment, allowing the state to collect its dues while easing burdens on taxpayers.
The law also aimed to encourage swift settlement by granting full or partial exemptions from penalties, late fees, and additional taxes, which motivated taxpayers to end disputes voluntarily instead of resorting to long and costly legal proceedings. Additionally, the law sought to improve the relationship between the tax administration and taxpayers, marking a shift from a punitive to a cooperative approach, focusing on transparency, fair settlements, and the removal of bureaucratic complexities, thereby enhancing voluntary compliance and integrating informal activities.
Law No. 6 of 2025 targeted the provision of technical support for implementing e-invoicing and accounting systems, simplifying tax calculation through fixed percentages of revenue, and granting exemptions for previous periods to new entrants into the system.
Key Features of the Tax Facilities
The legislative package includes several mechanisms offering taxpayers a golden opportunity to regularize their status before the deadline. Among the most prominent are the settlement of tax disputes prior to 2020, covering disputes under review before appeal committees or courts or those still unresolved, with full exemption from late fees, additional taxes, and penalties, requiring only payment of the principal tax, provided payment is made within three months of application and proper accounting records are kept.
It also includes settlement of unlisted real estate or financial transactions, covering all transactions involving real estate or securities outside the stock exchange, with payment limited to the tax due for the last five years only and full exemption from penalties.
The facilities further allow the submission of original or amended tax returns—for income tax for the periods from 2020 to 2023, and for VAT for the periods from 2020 to 2024—with full exemption from financial penalties for delays or errors. Small enterprises with an annual turnover not exceeding EGP 20 million may join the integrated tax system, receiving exemption from previous dues if registered before 12 August 2025, with low tax rates between 0.4% and 1% of revenue, in addition to technical and technological support.
How to Apply for the Tax Facilities
The Egyptian Tax Authority has set out clear and simplified procedures to enable taxpayers to benefit from these facilities. The first step is to determine the type of facility required—whether tax dispute settlement, real estate transaction settlement, submission of a new or amended return, or joining the simplified system—according to the taxpayer’s status.
Next, the required documents must be prepared, including the tax registration number or tax card, personal ID or commercial registry, and supporting documents such as contracts, invoices, committee reports, accounting records, and any necessary accounting certificates or technical reports.
Next, the required documents must be prepared, including the tax registration number or tax card, personal ID or commercial registry, and supporting documents such as contracts, invoices, committee reports, accounting records, and any necessary accounting certificates or technical reports.
The Impact of Technical Support on Small and Micro Enterprises
Law No. 6 of 2025 not only provided exemptions or reduced tax rates but also introduced a comprehensive package of technical and technological support. This included the provision of accounting equipment and software, such as point-of-sale devices and computers equipped with programs compatible with the electronic tax system, along with free or heavily subsidized software, and hands-on training on issuing invoices, recording transactions, and linking data directly with the authority.
It also included training and qualification programs through in-person workshops across all governorates, online webinars to expand access, and training content covering system registration, invoice management, and simplified tax obligations.
The package reduced operational costs by granting full exemption from previous penalties for registration within the specified period and applying low tax rates between 0.4% and 1% instead of full accounting audits. It encouraged joining the formal market by enabling contracts with government agencies and major companies, providing access to bank financing and soft loans, and offering better legal protection in commercial transactions. Post-registration support continued through direct technical hotlines, online assistance, regular software updates, performance monitoring, and advice to avoid mistakes.
الختام
Today represents the last chance to benefit from the largest package of tax facilities in Egypt’s history before entering a new phase of strict enforcement of obligations. This initiative is not merely about exemptions but a strategic step to rebuild trust between the state and taxpayers, address the backlog of the past, and pave the way for sustainable voluntary compliance. Taking advantage of this opportunity allows taxpayers to settle their tax status at the lowest cost, enables the state to collect its dues quickly without prolonged disputes, and strengthens the national economy’s ability to grow and face challenges.
Frequently Asked Questions
What is Egypt’s 2025 tax reform package?
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It is a comprehensive reform anchored in Law No. 5 and Law No. 6 of 2025. The package aims to enhance tax efficiency and fairness, resolve long-standing disputes, simplify procedures, and support small and micro enterprises to integrate the informal economy into the formal system.
What does Law No. 5 of 2025 change?
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Law No. 5 establishes fast tracks to settle accumulated tax disputes, including full or partial exemptions from penalties, late fees, and additional taxes in exchange for prompt payment of principal tax. It shifts the approach from punitive to cooperative, easing administrative and judicial burdens.
Who is eligible and what are the key deadlines?
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Eligible cases include disputes prior to 2020, unlisted real estate and financial transactions, and returns for income tax (2020–2023) and VAT (2020–2024). Dispute settlements require payment within three months of application. Small enterprises (turnover ≤ EGP 20 million) should register before 12 August 2025 to get prior dues waived.
What does Law No. 6 of 2025 provide for small and micro enterprises?
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It introduces a simplified tax system with low fixed rates on revenue (0.4%–1%), exemptions for previous periods upon timely registration, and extensive technical support such as e-invoicing tools, subsidized software, and hands-on training.
How do I apply for these facilities?
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Choose the relevant track (dispute settlement, transaction settlement, original/amended return, or simplified system). Prepare your tax registration/card, ID or commercial registry, and supporting documents (contracts, invoices, committee reports, accounting records, and required certificates or technical reports) and submit to the Egyptian Tax Authority.
What benefits extend beyond tax savings?
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The reform facilitates contracting with government and large companies, improves access to bank financing and soft loans, provides stronger legal protection in commercial dealings, and offers post-registration support via hotlines, online assistance, regular software updates, performance monitoring, and advisory to prevent errors.
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