Egypt: Egypt Announces New Incentives for MSMEs

On the 12th of February 2025, the President of Egypt announced Law No. 6 of 2025 regarding tax incentives and facilities to Micro, Small and Medium Enterprises (MSMEs).  

This new law aims to broaden Egypt’s tax base over time and encourages the formalization of many smaller businesses in Egypt that operate outside the formal tax system by offering incentives and reducing the barriers to entry while promoting the digitalization of the tax landscape and voluntary compliance. This law takes effect immediately and will be implemented within one month from the day of publication by the Minister of Finance. The benefits, procedures and requirements outlined in the announcement are as follows:   

• This new law grants applicable businesses exemptions from: 

  • The income tax withholding system and advanced tax payments  
  • Fees for notarizing company documents and credit/mortgage contracts 
  • Tax and fees on land registration contracts  
  • State Financial Resources Development Fee 
  • Stamp Duty 
     

• Capital gains on selling fixed assets and machinery are tax exempt  

• Dividends from these enterprises are tax exempt 

These incentives apply to enterprises with an annual turnover of EGP 20 million or less, including professional activities, whether or not they are registered for tax purposes on the date this law is enforced. This law does not apply to professional consultancy businesses that generate at least 90% or more of their annual revenue from the provision of consultancy services to one or two clients or enterprises that artificially split/fragment activities without economic justification.   

Turnover is assessed using the latest final tax assessment (if registered), the most recent filed tax return and/or data from e-invoicing or receipt systems.  

The income tax due based on turnover for applicable enterprises is as follows: 

• 0.4%: < EGP 500k   

• 0.5%: < EGP 500k-<2M 

• 0.75%: EGP 2M-<3M 

• 1%: EGP 3M-<10M 

• 1.5%: EGP 10M-<20M 

• An enterprise may still be eligible if turnover exceeds EGP 20M by ≤20% once in 5 years starting from the date of submission. If the annual turnover exceeds 20% and/or occurs more than once during this period, the benefits will be revoked the following year.  

The requirements for an enterprise to benefit from the tax incentives and facilities provided by this law include; submission of the application, timely filing of all required returns along with the adoption of the Egyptian Tax Authority’s E-invoicing/receipt platform which was launched in 2020. A separate form is required for an enterprises annual tax return on commercial, industrial or professional activity to be filed annually for income and payroll taxes and quarterly for VAT returns. Applicable enterprises are not obligated to maintain complex records and books prescribed in the Uniform Tax Procedure Law as long as the simplified systems of records is applied. All tax returns filed by enterprises subject to this law will be audited after five years from the date of submission of the application.

If you wish to discuss these topics, please contact:

WTS Egypt LLC