Monthly Accounting Close in an Egyptian Company: What Closes and Why

Executive summary

• In a joint-stock company, Companies Law No. 159 of 1981 requires financial statements for every financial year, prepared by the board and ratified by the ordinary general meeting (articles 64 and 63); the monthly close is the discipline behind that figure, not a cosmetic step.
• Every month: cash, bank, and trade receivable and payable balances are reconciled, stock is costed, depreciation is posted, and the month carries only its own share of prepayments and accruals.
• Withheld salary tax is remitted within the first fifteen days of the following month (article 14, Income Tax Law No. 91 of 2005), and social insurance contributions fall due from the first day of the month after the month they relate to, with fifteen days before the additional amount applies (article 71, executive regulations of the Social Insurance and Pensions Law No. 148 of 2019).
• VAT's tax period is one calendar month (article 1, VAT Law No. 67 of 2016), and its return is filed within the following month (article 31, Unified Tax Procedures Law No. 206 of 2020); the quarterly Form 41 and the other dates are in the compliance calendar.
• Balances and transactions between entities of the same group are disclosed in each entity's own statements and eliminated on consolidation (Egyptian Accounting Standard No. 15).

Substantiating the balances: cash, receivables, payables, stock and fixed assets

The close starts with every bank account reconciled against its statement — method is a separate subject — and customer and supplier statements reconciled against their general-ledger balances; an unexplained difference is not accepted, and this updates the ageing behind the expected-credit-loss provision and the follow-up of collections and payments.

Stock closes by reconciling the book balance against a periodic or perpetual count and costing the month's movement, since period profit rests on that figure first. Fixed assets close by recording the month's additions and disposals in the register and posting depreciation, so the ledger balance still reflects a real register, not a figure nobody checks until year-end.

The accrual basis and intercompany transactions

A prepaid expense is charged to the month by its own share only, and an accrued expense due but unpaid is posted before the month closes, not after — otherwise one month's profit is pushed into a month it does not belong to. Accrual, not collection or payment, is what every monthly figure rests on.

Balances with related parties are reconciled every month; those between entities of the same group are eliminated on consolidation, and a difference missed monthly is hard to explain by year-end. Paragraph 4 of Egyptian Accounting Standard No. 15 states that "transactions between the entities of the group and the outstanding balances are eliminated in preparing the group's consolidated financial statements, except those between an investment entity and its subsidiaries that are measured at fair value through profit or loss," while each entity's own statements still disclose them.

Payroll: the salary-tax and social-insurance liabilities

Payroll closes on two separate liabilities, each on its own date: withheld salary tax on each payment must be remitted to the competent tax office within the first fifteen days of each month for what was withheld the previous month (article 14, Income Tax Law No. 91 of 2005), and social insurance contributions due for a month are paid from the first day of the month after the month they relate to (article 71 of the executive regulations of Law No. 148 of 2019, issued by Prime Ministerial Decision No. 2437 of 2021), with the employer exempted from the additional amount if payment is made within fifteen days of the due date. Closing payroll means what was withheld on the run matches what will actually be remitted on both fronts.

The contribution base is not the same for every employee. Private-sector employees under the Labour Law are assessed for the calendar year on their January wage, and an employee who joins after January on the wage of the month of joining until the next January; assessment on the wage due each month applies to employees of the state administration, public bodies, the public sector and the public business sector (articles 3 and 70 of the regulations). Enterprises that have joined the regime of Law No. 6 of 2025 are limited, for salary tax, to filing the annual settlement return together with payment of the tax (article 12 of that law).

Reconciling VAT and the withholding account

VAT's tax period is one calendar month, ending on its last day (article 1, VAT Law No. 67 of 2016), and every registrant must file a monthly return for it with the competent tax office within the following month (articles 29 and 31, Law No. 206 of 2020). Closing the VAT line means reconciling output tax collected and deductible input tax against the month's books before the return is drafted — what surfaces afterwards needs an amended return. Enterprises that have applied to join the regime of Law No. 6 of 2025 — open to businesses with annual turnover up to EGP 20 million, but not automatic for every business below that figure — instead file every three months, within the month after the quarter ends, with payment of the tax (articles 1 and 12 of that law).

The withholding tax account on customers is reconciled the same way; its mechanics are in Withholding tax and Form 41 in Egypt. Twelve consistent monthly closes ultimately feed the annual corporate tax return.

What the monthly close feeds directly — check the exact date from its own source at each due date:

Management accounts and locking the period

The practical point is a figure management can read: profit margin, working capital and cash movement, against budget or the same month a year earlier — produced by monthly closes consistent in their basis, not by annual statements alone.

The last step is locking the period in the system once its figures are approved, so no later entry dated in a closed month is accepted without deliberately reopening it. A reconciled figure should not move because of an entry added weeks later; a needed correction belongs in the current month, as a dated adjusting entry stating why.

What this requires

• Set an internal monthly close timetable for each cycle, ahead of the legal deadline, not chasing it.
• Reconcile every general-ledger account to its sub-ledger before posting any closing entry.
• Remit withheld salary tax within the first fifteen days of the following month.
• Remit social insurance contributions from the first of the following month; the fifteen-day grace period is not the normal due date.
• Reconcile the VAT account and the withholding account before drafting any return.
• Eliminate intragroup balances and transactions on consolidation, and disclose them in each entity's own statements.
• Lock the period in the system once its figures are approved, and reopen it only by deliberate decision.

The firm's Accounting & Bookkeeping Department closes clients' monthly periods and reconciles their balances against their tax and social-insurance liabilities before each return.

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.