Egypt income tax amendments 2026: what Law 151 changes

Executive summary

• Law No. 151 of 2026, amending certain provisions of the Income Tax Law issued by Law No. 91 of 2005, was published in the Official Gazette, issue No. 30 bis (A), on 28 July 2026 and applies from the day following its publication.
• A debt not exceeding ten thousand pounds is deductible without litigation, within a cap of 1% of the total debtors balance at the end of the tax year.
• Dividends from subsidiaries to a parent or holding company are now fully exempt: the 10% add-back in the previous text has been dropped, while the 25% and two-year conditions remain (article 50, item 10).
• On property disposals the burden of displacing the contract value falls on the Egyptian Tax Authority (the ETA), and payment is due within sixty days of the disposal.
• Businesses with annual turnover up to ten million pounds may settle their non-final tax for periods from 2022 to before March 2025 at a fixed amount or a percentage of turnover, while keeping the right to elect ordinary assessment.
• For larger companies: a 15% investment incentive for three years on listing on the Egyptian Exchange, subject to a market value of not less than fifty billion pounds.
• The law replaced seven articles, added four provisions, and repealed five articles together with article 7 of Law No. 30 of 2023. Its executive regulations had not been issued as at the date of this bulletin, and the law refers to them in more than one place.

The law is one of seven tax laws published in the same issue of the Official Gazette; all seven are reviewed together in Egypt's July 2026 tax package.

Bad debts — article 28, first paragraph, item 4

Under the replaced text, deduction requires that the business has taken serious steps to recover the debt and has been unable to collect it after twelve months from its due date. The law lists the qualifying steps in the alternative:

• Obtaining a payment order in cases where that is available.
• A first-instance court judgment obliging the debtor to pay the debt.
• Claiming the debt in enforcement of a bankruptcy judgment against the debtor, or of a protective composition.

A first-instance judgment is enough; a final judgment is not required.

Excepted from all of the above is a bad debt not exceeding ten thousand pounds per debt, provided that total bad debts do not exceed 1% of the taxpayer's total debtors balance at the end of the tax year, as regulated by the executive regulations.

For a business with many small customer balances this is the largest practical change: it removes the need to litigate small debts, within the annual cap.

Property disposals — article 43, replaced in full

Tax is charged at 2.5% with no reduction on the gross value of the disposal of real property, or land for building on it, other than in villages, however many the disposals: whether the disposal is of the property as it stands or after structures have been erected on it, whether it covers the whole property, a part of it or a residential unit in it, whether the structures stand on land owned by the taxpayer or by another, and whether or not the contracts of disposal are registered — an unregistered contract is within the charge just as a registered one is.

Two provisions in the replaced text matter most.

The gross value is determined by the disposal contract, and the burden of proof falls on the ETA where it does not accept that value. The contract value is the starting point, and departing from it is for the ETA to establish.

Such disposals are not treated as a trade unless the ETA proves that they were carried on professionally with the intention of trading and making a profit, under article 19, item 7.

The disposer must pay within sixty days of the date of disposal, and the late payment charge under article 110 runs from the day following the end of that period.

A taxable disposal includes sale, bequest, donation or gift to other than ascendants, spouses or descendants, the creation of a usufruct right over the property, and letting for a term exceeding fifty years. Not taxable: forced sales, whether administrative or judicial; expropriation for public benefit or for improvement; and donation or gift to the government, local administration units, public juridical persons or public-benefit projects.

Excluded is the contribution of property as an in-kind share in the capital of a joint-stock company, provided the corresponding shares are not disposed of for five years.

Dividends — article 56 bis

Dividends distributed by capital companies or partnerships, including companies established under the special economic zones regime, to a non-resident individual and to a resident or non-resident juridical person are taxed at 10% with no costs deducted. The rate is 5% where the securities are listed on the Egyptian Exchange, again with no costs deducted. Distributions made in the form of bonus shares fall outside the charge.

Civil companies are treated as partnerships for the purposes of this article.

One provision is easily missed: the profits of a non-resident juridical person realised through a permanent establishment in Egypt are deemed distributed within sixty days of the end of the permanent establishment's financial year — the charge arises without any actual distribution.

The article carries two separate exclusions, each with its own base:

Dividends received by resident juridical persons from other resident juridical persons, and their corresponding cost, are excluded from the base of the tax on the profits of juridical persons provided for in Book Three of this Law, as determined by the executive regulations of this Law.

Distributions received by a company resident in Egypt from distributions made by another resident company are likewise excluded from the dividend tax base.

Taken together, distributions between resident companies fall outside both bases, within the limits the executive regulations set.

These two provisions replaced a different mechanism. The previous text, enacted by Law No. 30 of 2023, allowed a credit against the tax due on dividends paid to a resident company, for tax paid on dividends the distributing company had itself received from another resident company, on four conditions: the credit was limited to the value of those dividends relative to the distributing company's total revenue; participation in the distributing company exceeded 25% of the resident company's capital or voting rights; the shares or stakes had been held for not less than two years; and the credit did not exceed the tax withheld on those same dividends. The provision has therefore moved from a credit subject to four conditions to a straight exclusion from the base. The rates, the bonus share exception, the treatment of civil companies as partnerships and the sixty-day rule for permanent establishments all stood in the previous text.

The paying entities must withhold and remit to the Central Administration for Deduction and Collection within five working days of the beginning of the month following the month of collection.

Securities

Listed on the Egyptian Exchange: capital gains are exempt, with losses from the disposal neither deductible nor carried forward to later years (article 50, item 7, and the added article 31, item 7). Excepted from the exemption are gains where the disposal results in the delisting of the company's shares.

Unlisted: tax applies to gains on the disposal of company stakes or unlisted securities, whether realised in Egypt or abroad. A non-resident disposer must compute and remit the tax within sixty days of the transaction date. The tax does not apply to a non-resident's gains on the disposal of treasury bills.

The base is the difference between the disposal price and the acquisition cost after deducting brokerage commission, with cost computed on a weighted average basis. Where the price is at fair value, there is added to the acquisition cost an amount equal to the Central Bank credit and discount rate for each year of holding, provided the securities or stakes are not disposed of before three years have passed.

Dividends received by a parent or holding company from resident and non-resident subsidiaries are exempt on two cumulative conditions: participation of not less than 25% of the subsidiary's capital or voting rights, and a holding period of not less than two years, or an undertaking to hold that percentage for two years from the date of acquisition (article 50, item 10).

Both conditions have stood since Law No. 30 of 2023. What changed is that the previous text granted the exemption "after adding 10% of the value of the distributions to the taxable base of the parent or holding company in respect of non-deductible costs" — and that add-back has been dropped, so the exemption is now full, with no proportion returned to the base.

Thin capitalisation — article 52, first paragraph, item 1

The general limit is unchanged: debit interest on loans and advances in excess of twice average equity per financial statements prepared under Egyptian Accounting Standards.

The limit rises to four times on three cumulative conditions: the juridical person executes national infrastructure projects designated by a decision of the Prime Minister upon the Minister's proposal; the loans and advances are obtained from unrelated parties; and its participation in the national projects is not less than 25% of the total value of its investments. The benefit ends with the end of the loan period and the completion of the project's basic works.

The item does not apply to banks, insurance companies or financing companies designated by ministerial decision. The Prime Minister's decision designating the infrastructure projects had not been issued as at the date of this bulletin.

The same projects attract a second provision. A fourth paragraph was added to article 56 exempting from the tax imposed by that article the returns on loans or facilities obtained by public sector, public business sector and private sector companies from unrelated persons to finance national infrastructure projects, on two conditions: the term of the loan or facility is not less than five years, and the company's participation in the national projects is not less than 25% of the total value of its investments. The benefit ends with the end of the loans and facilities relating to the project's basic works.

Incentive for listing on the exchange — article 3

Companies offering their shares on the Egyptian Exchange under a prospectus approved by the Financial Regulatory Authority are granted an investment incentive of 15% as a deduction from the tax due per the income tax return, for three years from the date of the offering.

Two conditions apply: the company's market value at the offering, on a fair value basis, must be not less than fifty billion pounds, and the shares offered must be not less than 20% of the company's shares or an offering of shares worth not less than ten billion pounds.

The incentive is available once only in the life of the company, may not be combined with any tax incentive provided in other laws, and may be extended for a further like period by decision of the Minister of Finance in coordination with the Financial Regulatory Authority. The executive regulations set the procedures for review and verification of the criteria, and the rules for suspending the incentive or recovering what has been granted where either condition is lost.

The takaful contribution as a deductible cost

The law added item 10 to article 23 and item 5 to article 33, both in the same terms: the value of the takaful contribution provided for in article 40, item Nine, of the Comprehensive Health Insurance Law issued by Law No. 2 of 2018.

Article 23 is the list of costs and expenses deductible in commercial and industrial activity, and article 33 is its counterpart for non-commercial professions. The takaful contribution is therefore deductible in both bases.

Settlement of non-final tax up to ten million — article 4

A transitional provision for businesses and companies whose annual turnover does not exceed ten million pounds, for tax periods beginning 1 January 2022 to the end of the tax period before March 2025, and at not less than the tax stated in their own returns:

The provision preserves the taxpayer's right to elect assessment under the ordinary rules of the Income Tax Law. The comparison is therefore made before the election, business by business and year by year.

Waiver of earlier capital gains — article 5

Unpaid capital gains tax on the disposal of shares listed on the Egyptian Exchange during the period from 16 June 2023 until this law came into force is waived, having regard to article 4 of Law No. 30 of 2023.

What was repealed — article 6

Article 18 of the Income Tax Law is repealed. That article provided that the rules and bases of tax accounting and the procedures for collecting tax on the profits of small businesses were to be issued by decision of the Minister. Its repeal therefore removes the legislative basis on which those rules were made.

The repeal does not take immediate effect on everything, however. The law provides that the rules, bases and procedures issued under article 18 continue to apply to the 2027 tax period and earlier — so they remain in force for 2026 and 2027 as well, not only for past periods. This is a stated transitional period, not merely an absence of retroactivity.

Articles 39, 46 bis 5, 46 bis 7 and 49 bis are also repealed, together with article 7 of Law No. 30 of 2023.

What this requires

• Review the bad debt policy: identify debts that have reached twelve months, schedule those not exceeding ten thousand pounds each, and measure the 1% annual cap against the debtors balance.
• Review property disposal contracts and the sixty-day payment deadline, and document the contract value.
• Review the financing structure against the twice-equity limit, and consider the higher limit where the national projects condition is met.
• For groups: review participation percentages and holding periods before subsidiary distributions, and schedule non-residents' permanent establishment profits against the sixty-day deeming rule.
• For businesses under ten million turnover: run the comparison between the fixed settlement and ordinary assessment for each year of the period.

Because the law refers to the executive regulations on bad debts, on the computation of capital gains and on the exclusion of dividends, those points remain pending their issue. The firm's Tax Department assesses the effect of these amendments case by case, prepares the resulting adjustments, and follows the implementing decisions as they are issued.

Mahmoud Nassef, CA, ESAA, MEST — Founder Partner
Member of the Egyptian Society of Accountants & Auditors (ESAA) and of the Egyptian Tax Society (MEST)
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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.