Egypt’s Finance Ministry put taxes paid and owed by previously-exempt entities at 67.4 billion Egyptian pounds ($1.4 billion) in fiscal year 2024-2025, after Law No. 159 of 2023 took effect.
According to Finance Ministry data, most of that revenue came from value-added tax, at 28.8 billion pounds ($612.8 million), followed by income tax (non-wage) at 18.1 billion pounds ($385.1 million), then a tax due on operating surpluses at government entities worth 11.1 billion pounds ($236.2 million), and stamp duty and withholding taxes totaling 8.4 billion pounds ($178.7 million).
Ending tax exemptions is one of the key demands of Egypt’s economic reform program under the IMF loan agreement signed in December 2022 and due to conclude this year. The fund also called for publishing tax-collection data under the 2023 law as part of its push for “competitive neutrality.”
In its “Report on taxes paid by public entities within the framework of competitive neutrality,” the ministry named some public entities, including the New Administrative Capital Company, which it said paid income tax of 7.9 billion pounds ($168.1 million) for 2023 and 2024.
The New Administrative Capital project has drawn wide debate as it absorbed a large share of public spending. A government source told Al Manassa in January that infrastructure and utilities for the capital’s second phase would cost 500 billion pounds ($10.6 billion).
The finance report also cited VAT withheld at source by designated withholding entities on services provided by clubs, saying collections made “a major leap” because of the law. It said VAT paid reached 22.7 billion pounds ($483.0 million) for Armed Forces clubs, while Interior Ministry clubs paid 700 million pounds ($14.9 million).
The report also referenced stamp duty and development fees paid by two cement companies affiliated with “sovereign entities,” totaling 1.02 billion pounds ($21.7 million), and VAT paid by military production companies (registered at the Large Taxpayers Center) totaling 1.9 billion pounds ($40.4 million).
The report did not name companies tied to “sovereign entities,” but said they paid 3.5 billion pounds ($74.5 million) in taxes.
Elsewhere, it cited total taxes paid by companies affiliated with “sovereign entities” across all tax bases, as well as amounts withheld on their behalf under income tax, totaling 16.4 billion pounds ($348.9 million).
The law projected tax revenues of 84.1 billion pounds ($1.8 billion) in taxes paid and owed by entities covered by the law in fiscal year 2025-2026.
Gaps in implementing the law
“This document does not just provide numbers on tax proceeds, it reflects a commitment to end decades of privileges enjoyed by government and sovereign entities, which created a competitive gap with the private sector,” Ahmed Said El-Bokl, head of the economics department at Suez University’s Faculty of Politics and Economics, told Al Manassa.
El-Bokl said the new law reflects the government’s current view that it needs to rebalance competition between the public and private sectors. “Collecting 22.7 billion pounds from Armed Forces clubs as VAT, and 7.9 billion pounds from the New Administrative Capital Company as income tax, breaks the stereotype that major, sovereign entities are exempt from financial obligations to the state,” he said.
He said canceling exemptions provides an alternative source of government funding instead of borrowing, which has become a heavy burden on public finances as financing costs rise. “Any failure to collect tax revenues from public entities will necessarily widen the financing gap, forcing the state to borrow at a high cost,” he said.
The finance minister said last August that public-debt interest consumed most state budget revenues in fiscal year 2024-2025, pushing the overall deficit to about 1.2 trillion pounds ($25.5 billion).
But El-Bokl pointed to indications in the report that some taxes were due but may not have been paid by the time it was issued, including 1.9 billion pounds ($40.4 million) owed by the New Urban Communities Authority, described as “under ratification to be collected by the Ministry of Finance.”
The report also noted that 134 government entities recorded operating surpluses totaling 40.3 billion pounds ($857.4 million) in 2023-2024, on which 9.1 billion pounds ($193.6 million) in taxes are due, bringing the total paid and owed to 13.3 billion pounds ($283.0 million), according to the report.
“This may point to a culture of noncompliance that still exists in some state entities,” El-Bokl said.
He said moving ahead with tax collection from sovereign entities would help improve Egypt’s standing on international investment-attractiveness indicators, such as the Index of Economic Freedom, which classifies Egypt as “mostly unfree” with a score of 50.9, and a rank of 145 out of 184 countries. The “main reason” is the state’s heavy presence in the economy, which crowds out the private sector, adding that competitive neutrality is “the only tool” to raise that score.
