Egyptian Accounting Standards vs IFRS: What Still Changes the Figures

Executive summary

• Statutory employee profit share: EAS 38 does not treat it as an expense (paragraphs 5A and 23); IAS 19 expenses it (paragraph 23).
• Measurement models: revaluation and fair value have been available since 2023, but EAS 34 as amended in 2024 allows fair-value changes to be taken to other comprehensive income, and both Egyptian standards require a valuer registered with the Financial Regulatory Authority.
• Expected credit losses: Appendix C to EAS 47 allows Egyptian government debt in pounds and short local deposits to be exempted; IFRS 9 does not exempt them.
• Hyperinflation: EAS 51 has been in force since 24 October 2024, but applying it where the Pound is the functional currency awaits a decision not yet issued; IAS 29 applies on the entity's own judgement.
• Currency: EAS 13's exceptional appendices have lapsed, and the lack-of-exchangeability rules are in force under both frameworks.

The statutory profit share: a distribution, not an expense

The employees' statutory share of profit (Companies Law No. 159 of 1981, article 41; see our bulletin on it) sits outside the scope of Egyptian Accounting Standard No. 38, "Employee Benefits" (amended in 2019 by Minister of Investment and International Cooperation Decision No. 69 of 2019, and not amended since): paragraph 5A excludes from employee benefits "the employees' share of profit mandated by legal provisions". Paragraph 23 then carves it out of the rule that profit-sharing is an expense: "except for the employees' statutory share of profit ... an entity recognises the cost of a profit-sharing and bonus plan not as a distribution of net profit but as an expense".

IAS 19 knows no such exception. Its paragraph 23 reads: "an entity recognises the cost of profit-sharing and bonus plans not as a distribution of profit but as an expense". In November 2010 the IFRS Interpretations Committee, answering a request about a statutory employee profit-sharing arrangement, noted that it "meets the definition of an employee benefit and is in the scope of IAS 19".

Egyptian net profit is therefore higher than the IFRS figure by whatever part of the share IAS 19 charges as an expense.

Measurement models: the same election, two remaining differences

Prime Ministerial Decision No. 883 of 2023 (Official Gazette 9 bis, 6 March 2023) allowed revaluation under EAS 10 and fair value under EAS 34 for periods beginning on or after 1 January 2023; before it, subsequent measurement was at cost only. Prime Ministerial Decision No. 636 of 2024 (Official Gazette 9 bis (a), 3 March 2024) then replaced EAS 34 a second time.

The election is now the same. EAS 10 paragraph 29 requires the cost model or the revaluation model to be applied "to each entire class of fixed assets", as IAS 16 paragraph 29 does; EAS 34 paragraph 30 offers fair value or cost for all investment property, as IAS 40 paragraph 30 does. Two differences remain:

• Where fair-value changes go. IAS 40 requires them in profit or loss (paragraph 35). EAS 34 also allows them "through comprehensive income, once in the life of the asset or investment" (paragraph 35); increases are then accumulated in equity as an "investment property fair value revaluation surplus" (paragraph 35A), and valuation gains do not pass through Egyptian net profit.
• Who values. Both Egyptian standards require the valuation to be done by experts on a register kept for the purpose by the Financial Regulatory Authority (EAS 10 paragraph 32 for land and buildings; EAS 34 paragraph 32). IAS 40 encourages, but does not require, an independent valuer (paragraph 32), and IAS 16 has no equivalent condition.

Expected credit losses: an Egyptian exemption for government debt

Prime Ministerial Decision No. 4575 of 2023 (Official Gazette 47 bis (f), 28 November 2023) added Appendix C to EAS 47, "Financial Instruments". An entity "may exempt" local-currency debt instruments issued by the Egyptian government, and local-currency current accounts and deposits with banks operating in Egypt maturing within one month of the balance-sheet date, from the recognition and measurement of expected credit losses, with disclosure (paragraphs 9 and 10), for periods beginning on or after 1 January 2023 (paragraph 11); the appendix sets no end date. IFRS 9 requires the allowance on every financial asset measured at amortised cost or at fair value through other comprehensive income (paragraph 5.5.1).

Currency: reliefs that have lapsed, a mechanism in force on both sides

Three temporary appendices were added to EAS 13: Appendix B (Decision No. 1568 of 2022) for the March 2022 exchange-rate movement; Appendix C (Decision No. 4706 of 2022) for the movement of 27 October 2022, extended by Decision No. 1847 of 2023 to the following financial year; and Appendix E (Decision No. 1711 of 2024) for the exchange-rate adjustment of 6 March 2024. Each was confined to the financial year that included its date (and, for Appendix C, the year after), so all have lapsed and none can support 2026 figures.

Decision No. 636 of 2024 also replaced EAS 13 in full and added a permanent rule for a lack of exchangeability between two currencies: the entity estimates the spot rate (paragraph 19A) using an observable rate that meets the conditions, either a spot rate for another purpose or the first subsequent rate (paragraph 19B), for periods beginning on or after 1 January 2024 (paragraph 58). The IASB issued a similar amendment to IAS 21 in August 2023, effective from 1 January 2025 (paragraph 60L); it presents those two rates as examples and also allows another estimation technique (A11–A17). Both texts apply to 2026.

Hyperinflation: a standard in force, not yet switched on for the Pound

Prime Ministerial Decision No. 3527 of 2024 (Official Gazette 42 bis (c), 23 October 2024) added a new Standard No. 51, "Financial Statements in Hyperinflationary Economies", in force from the day after publication. It is the latest decision amending the Egyptian Accounting Standards as of 29 September 2026 (the full chain of decisions is in Egyptian Accounting Standards: recent amendments and effective dates).

Neither standard sets an absolute rate (EAS 51 paragraph 5; IAS 29 paragraph 3). Among their shared indicators is that "the cumulative inflation rate over three years is approaching, or exceeds, 100%" (IAS 29 paragraph 3(e); EAS 51 paragraph 5(e)). But application differs fundamentally. EAS 51 paragraph 6 provides that "a decision of the Prime Minister or his delegate shall set the start and end dates of the financial period or periods during which this standard must be applied when the recording currency is the local currency", and no official source shows that decision has been issued to date. IAS 29 applies from the beginning of the period in which the entity identifies hyperinflation (paragraph 4), and in June 2025 the IFRS Interpretations Committee found that practice does not base that judgement on a single indicator.

Egyptian statements may therefore stay unrestated while the same entity's figures are restated within a group reporting under IFRS, once the group concludes that the IAS 29 indicators are met.

Table: differences in 2026

The table does not list every difference between the two frameworks.

What this requires

• Treat the statutory profit share as a standing reconciling item between Egyptian and IFRS net profit.
• Move fair-value changes on investment property recognised in other comprehensive income to profit or loss in IFRS statements.
• Check that valuations of land, buildings and investment property were prepared by a valuer registered with the Financial Regulatory Authority.
• Measure expected credit losses on instruments exempted under Appendix C to EAS 47 for IFRS reporting.
• Do not rely on EAS 13's exceptional appendices for the 2026 close.
• Track the decision that would switch on EAS 51 for the Pound, and assess all the IAS 29 indicators for any IFRS reporting.

The firm's Audit & Assurance Department identifies these differences when reviewing Egyptian-basis financial statements for an entity consolidated into an international group, and measures their effect on the figures before consolidation.

Mahmoud Nassef — Chartered Accountant (Egyptian Register), Founder Partner

Member, Egyptian Society of Accountants & Auditors
Member, Egyptian Tax Society
Member, Egyptian Society for Public Finance and Taxation

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Disclaimer: This bulletin is prepared for general information on the legislation in force at the date of its publication. It does not constitute a professional opinion or tax or legal advice on any particular matter, and it should not be relied upon in place of advice based on an examination of the circumstances of each case. Nassef & Partners International accepts no responsibility for any action taken, or refrained from, in reliance on its contents. The positions stated remain subject to subsequent legislation and decisions.