Egypt's parliament approved final amendments today to the value-added tax (VAT) law, introducing significant tax increases on cigarettes, alcoholic beverages, crude oil, and certain services, in a vote that followed a last-minute government proposal submitted Saturday.
The move is part of the government's effort to balance the national budget and expand public revenue, according to Fakhry Elfeki, head of the Planning and Budget Committee in the House of Representatives.
“The revised pricing brackets ensure producers can price their goods correctly,” Elfeki said, referring to the new cigarette and alcohol pricing structure.
The amendments will raise the tax ceiling on both domestic and imported cigarettes, with price caps now structured across three tiers.
Locally made brands previously capped at 38.88 Egyptian pounds (about $0.78) can now be priced up to 48 pounds (about $0.97). Higher-priced local cigarettes, previously priced between 38.88 and 56.44 pounds ($1.14), may now be sold for up to 69 pounds ($1.39).
The highest tier, for cigarettes sold above 56.44 pounds, is now capped at 79 pounds ($1.59). Imported cigarettes in the mid-tier bracket will also be capped at 69 pounds.
Annual tax increases of 12% will apply for three years starting November 2025.
Meanwhile, alcoholic beverages will be taxed according to alcohol content, with an annual increase of 15% for the first three years and 12% thereafter.
The new law also eliminates VAT exemptions on crude oil, which will now face a standard 10% tax. A special tax mechanism for crude oil had been previously introduced to ensure compliance and increase state revenues.
Additionally, certain services provided by news agencies and advertising firms will now incur VAT. Moreover, construction and contracting work, previously exempt from a “schedule tax,” will now fall under the general VAT rate, though the change is intended to allow for input tax deductions, potentially easing some financial burdens on these activities.
This change allows businesses in these sectors to deduct input taxes, ultimately reducing their financial burden.
The rapid legislative process sparked debate within Parliament. Abdel-Moneim Imam, secretary-general of the planning and budget committee, condemned the government's surprise submission, warning of public backlash.
“Why does the government keep triggering crises? Yesterday it was the Menoufiya accident, today it's a sudden amendment to the VAT,” Imam said. He also criticized the government’s decision to refer amendments to the education law to parliament just before the end of the fifth legislative session, saying, “We’re exhausted—laws keep coming in unexpectedly. This puts parliament at odds with the people over problematic legislation.”
He further slammed the proposed bill for granting the education minister sweeping powers without consultation.
In response, Minister of Parliamentary Affairs Mahmoud Fawzy defended the move, saying, “We are building a state and that requires the courage to face tough decisions,” he said.
