Tax Loss Carry-Forward in Egypt: How Long It Runs and Its Limits
How many years can a tax loss be carried forward in Egypt? Five, used in strict order, never renewed, with separate rules for long-term contracts and several income sources.
Executive summary
- The rule: five years, used in order, never renewed. A year's loss is deducted from the following year's profit, the remainder is carried forward year by year until the fifth year, and then any unused balance is permanently lost (article 29 of Income Tax Law 91 of 2005, whose text has not been replaced since enactment).
- Long-term contracts are computed separately first. A contract's loss is set against the contract's own profits in its earlier tax periods; only the excess falls under article 29 (article 21).
- A loss in one of a natural person's income sources is first set against the net income of the other sources, salaries excepted, and only what remains follows article 29 (article 37 of the executive regulation issued by Minister of Finance Decree 991 of 2005).
- Non-commercial professions carry an extra condition: no carry-forward unless the taxpayer keeps regular books (article 35, closing paragraph).
- Losses that cannot be carried forward: a loss arising from the deduction of a tax exemption (article 50), and losses on disposals of securities listed on the Egyptian Exchange from 29 July 2026 under Law 151 of 2026, which also repealed article 29 bis.
- Article 29's text sets no continuity condition, and it has no application under the simplified tax regime (Law 6 of 2025), where tax is a percentage of turnover.
The basic period and how it runs
Article 29 of the Income Tax Law reads: "If the account of one of the years closes with a loss, this loss is deducted from the profits of the following year; if part of the loss then remains, it is carried forward annually to the following years until the fifth year, and after that nothing more of the loss may be carried to the account of another year." The right is limited to five years counted from the year following the loss year, and anything left after the fifth year is permanently forfeited. The article's text has not been replaced since the Law was enacted in 2005.
Illustrative example: a business loses EGP 1,000,000 in its 2021 tax year, then makes a profit of EGP 100,000 in 2022, leaving 900,000; 150,000 in 2023, leaving 750,000; and 200,000 in 2024, leaving 550,000. In 2025 (the fourth year) it makes no profit, so 550,000 remains. In 2026, the fifth and last year to which the loss can be carried, it makes a profit of 300,000, which absorbs only that amount; the remaining EGP 250,000 is permanently lost and cannot be carried into 2027.
The table summarises the general regime and the cases governed by other provisions:
| Case | Governing text | Basic limit |
|---|---|---|
| An ordinary commercial or industrial loss | Article 29 | Five years, in order, then forfeited |
| A long-term contract's loss | Article 21 | Absorbed first by the contract's profits in its earlier periods; only the remainder follows article 29 |
| A loss in one of a natural person's income sources | Article 37 of the regulation (implementing article 6) | Set against the other sources' net income in the same year; the remainder follows article 29 |
| A non-commercial profession's loss | Article 35 (closing paragraph) | No carry-forward without regular books |
| A loss arising from the deduction of a tax exemption | Article 50 (closing paragraph) | Not carried forward |
| A loss on disposing of securities listed on the Egyptian Exchange | Articles 31 and 50 (item 7) after Law 151 of 2026 | Neither deducted nor carried forward from 29 July 2026 |
The exception for long-term contracts
A project executed over more than one tax period (manufacturing, fabrication, construction or related services, for a fixed price and on behalf of a third party) is computed separately first under article 21. If the period in which the contract's execution ends closes with a loss, that loss is deducted first from the profits of the earlier tax periods over which the contract's execution was spread, and only up to the contract's own profit in those periods; the tax for those periods is then recalculated and the taxpayer recovers any excess paid. Only the loss that exceeds this limit is carried forward under article 29 itself, not over a separate period.
Setting one income source's loss against another's income
A natural person with several taxable sources of income (other than salaries and the like) does not carry a loss in one of them forward directly. Article 37 of the executive regulation provides that, when losses arise in one source, "the algebraic aggregation is made only within the limit of the net income from them"; what remains of the loss then follows article 29, or the second paragraph of article 35 where the loss arose from a non-commercial profession. Offsetting comes before carry-forward, not instead of it, and only within the same tax year.
Non-commercial professions: carry-forward is conditional on regular books
Article 35, which governs deductible costs and expenses for non-commercial professions, closes with: "In applying the provisions of this Part, article 29 of this Law applies if the taxpayer keeps regular books." A professional who does not keep regular books has no right to carry any part of a year's loss forward at all, unlike a commercial or industrial taxpayer, for whom article 29 itself states no such condition.
Losses that cannot be carried forward: exemptions and securities
Article 50 of the Law, as replaced by Law 30 of 2023, closes with the rule that "the deduction of any tax exemption provided for in this Law or in any other law may not result in losses being carried forward to subsequent years". Deducting exempt income therefore cannot create a loss available for carry-forward.
Article 29 bis, added by Law 53 of 2014 as an exception to article 29, provided that capital losses on the disposal of securities were deducted within the limit of the capital gains on securities in the same year, with any excess carried forward against gains on securities in the following years "until the third year". Law 151 of 2026 repealed it with effect from 29 July 2026, the day after publication, with no transitional rule for amounts already carried forward under it (article 6 of that law as corrected by the corrigendum published on 8 August 2026; the article number had been printed in error as "39 bis"). The same law exempted capital gains on disposals of securities listed on the Egyptian Exchange with no deduction of the losses arising from them (article 50, item 7), and added an item 7 to article 31 to the same effect that also bars "carrying them forward to later years". A disposal that results in the company's shares being delisted is excluded from the exemption. Details are in Income tax amendments under Law 151 of 2026.
The carry-forward rules have no application under the simplified tax regime. A business with annual turnover of no more than EGP 20 million that elects Law 6 of 2025 pays income tax as a percentage of its turnover (article 10), and the Law contains no provision on losses, including losses accumulated before the election — see the simplified tax regime.
No continuity condition in article 29
Article 29's text does not require the business to remain under the same owner or to continue the same activity, and it does not deal with a merger or a change of legal form; the right to carry a loss forward is not cut off by this article merely because ownership or the activity changes. Changes of legal form, including mergers and divisions, have their own rules in article 53 of the Law and its executive regulation, which must be checked before relying on a carry-forward after such a change.
What this requires
- Track each loss year's balance separately, since every loss year runs its own five-year window.
- Never assume the carry-forward extends beyond the fifth year, whatever the reason the loss went unabsorbed.
- Keep a long-term contract's loss separate, applying article 21's limit before article 29.
- Set a natural person's income sources against one another within the limit of their net income before carrying any remaining loss forward.
- Confirm that a non-commercial professional keeps regular books before relying on any carry-forward of the loss.
- Exclude from the carried-forward balance any loss created by deducting exempt income and any loss on listed securities from 29 July 2026, and review amounts carried forward under article 29 bis.
- Exclude businesses taxed under Law 6 of 2025 from this regime altogether: their base is turnover, not net profit.
The firm's Tax Department computes the carry-forward balance for each activity separately, tracks when it lapses, and checks that the regular-books condition is met before a carry-forward is entered in the tax return.
Mahmoud Nassef, Founder Partner
Chartered Accountant, Ministry of Finance, Egypt
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.