Egyptian officials and businessmen have recently discussed a plan to introduce a new 2% tax on net corporate profits to replace all other fees levied on investors, two sources familiar with the talks at the Ministry of Housing and the Federation of Egyptian Chambers of Commerce (FEDCOC) told Al Manassa.
On April 20, President Abdel Fattah El-Sisi ordered the government to scrap the myriad fees charged by various authorities and agencies. He instructed replacing them with a single unified tax on net profits, with the aim of streamlining financial procedures and improving Egypt's business environment.
A source in the Ministry of Housing, speaking on condition of anonymity, said the discussions with investors focused on the complexity of overlapping fees from different entities, making it difficult for investors to calculate the total burden.
“The lack of clarity about the overall taxes and fees prevents investors from preparing sound feasibility studies and estimating the expected profit margins,” the source said. “This reduces the chances of attracting new investors and hinders Egypt's efforts to draw global investment,” they added.
The meetings included representatives from the tax authority and various ministries, alongside business figures and board members from FEDCOC.
“The next step is to present this plan to the Cabinet for approval, after which the government will draft a bill if it gets the green light,” the source said.
Last year, Minister of Investment and Foreign Trade Hassan El Khatib told Al Manassa that monetary and fiscal policies in Egypt must be reformed to attract fresh investment. He stressed that the current system of dozens of overlapping fees from different state bodies was unsustainable.
El Khatib said investors want clear financial and tax policies for several years ahead to ensure stability and promote investment.
A separate source at the Federation of Egyptian Chambers of Commerce confirmed that foreign investors had asked for more details on the total costs of the fees at the meeting as they considered investing in the local market. However, the Federation did not have a comprehensive list of these fees, which left them facing a crisis.
The source added that President El-Sisi's directive to consolidate all fees into a single tax could fast-track a final decision on this matter, as it would remove major barriers for both local and foreign investors.
In a previous Al Manassa report, experts estimated that the current system of multiple fees raises Egypt's effective tax rate on corporate profits to 37%. This includes all imposed charges, not just the 22.5% corporate income tax rate.
