Egypt’s Cabinet Approves Draft Law to Eliminate Tax Exemptions for State Entities

Egypt’s cabinet has taken a significant step towards attracting private investment by approving a draft law to eliminate tax exemptions for state entities. The move comes as Egypt grapples with a severe foreign currency shortage and aims to level the playing field between the private and public sectors.

The decision to scrap tax exemptions for state-owned enterprises, including those owned by the army, is part of the government’s efforts to improve the investment climate and encourage more investment from both foreigners and Egyptians. Many investors have been hesitant to invest in Egypt due to concerns that state-owned enterprises enjoy unfair advantages through tax exemptions and other privileges.

While the draft law retains some exemptions for activities related to national security and international agreements, it aims to ensure that state entities do not have an unfair advantage over private businesses. The military and other security institutions will still be exempt from certain taxes for goods and services needed for armament, defense, and national security.

The approval of the draft law is a positive step towards creating a more competitive and attractive investment environment in Egypt. The law will now need to be approved by parliament and the president before it can be implemented. This move is in line with the International Monetary Fund’s recommendations under a $3 billion financial support agreement signed in December to encourage private sector participation in the economy.

Overall, the decision to eliminate tax exemptions for state entities is a significant development that could help boost private investment in Egypt and support economic growth in the country.