Egypt income tax amendments 2026: what Law 151 changes

Law 151 of 2026 allows a bad debt not exceeding EGP 10,000 to be deducted without litigation, within an annual cap, and places on the Egyptian Tax Authority (the ETA) the burden of displacing the value stated in a property disposal contract; these are among its main provisions. Published in the Official Gazette, issue 30 bis (A), on 28 July 2026, it amends certain provisions of the Income Tax Law issued by Law 91 of 2005 and applies from the day following its publication. It replaced seven articles, added four provisions, and repealed five articles together with article 7 of Law 30 of 2023. It is one of seven laws published in the same issue, all reviewed together in Egypt's July 2026 tax package.

The law reaches businesses in the bad debts and debit interest they deduct, anyone disposing of built property or land for building, and groups in which a parent or holding company receives dividends from its subsidiaries. It allows businesses with annual turnover not exceeding EGP 10 million to settle their non-final tax at a fixed amount or a percentage of turnover, and grants companies listing their shares on the Egyptian Exchange at a market value of not less than EGP 50 billion a 15% investment incentive for three years.

The tax base

Under the text substituted by Law 151, deduction of a bad debt 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 (item 4 of the first paragraph of article 28 of Law 91). 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 EGP 10,000 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.

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 item Nine of article 40 of the Comprehensive Health Insurance Law issued by Law 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 has therefore become deductible in both bases.

On thin capitalisation, 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 (item 1 of the first paragraph of article 52 of Law 91). By way of exception, interest is deductible within transitional ratios of three times average equity for tax years 2024 to 2027, and twice for tax year 2028 (article 5 of Law 30 of 2023). Law 151 did not repeal that article, so the limit for tax year 2026 is three times.

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 when the term of the loans relating to the execution of the basic works of the national project in which it participates ends. The item does not apply to banks, insurance companies or companies carrying on financing activity designated by decision of the Minister. As at 28 October 2026 we had found no Prime Minister's decision designating the infrastructure projects.

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.

Dividends and securities

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 (article 56 bis of Law 91). 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, and civil companies are treated as partnerships for the purposes of this article. These are the standard-regime rates; dividends of businesses subject to the simplified tax regime are treated differently, as set out with the conditions in Egypt's Simplified Tax Regime for Small Enterprises.

The article also contains a provision that 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, so the charge arises without any actual distribution. When a permanent establishment arises in the first place is covered in Permanent Establishment in Egypt: Triggers and the 60-Day Rule.

It also carries two separate exclusions, each with its own base. The first reads (unofficial translation): "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." The second: "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.

The first already stood in the previous text, enacted by Law 30 of 2023; the second replaced a different mechanism, under which that text 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.

For the dividend tax base, the provision has therefore moved from a credit subject to four conditions to a straight exclusion. The rates, the bonus share exception, the treatment of civil companies as partnerships, the sixty-day rule for permanent establishments and the exclusion from the base of the tax on the profits of juridical persons all stood in the previous text.

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

Capital gains on securities listed on the Egyptian Exchange are exempt, with losses from the disposal neither deductible nor carried forward to later years (item 7 of article 50, and item 7 added to article 31, of Law 91). Excepted from the exemption are gains where the disposal results in the delisting of the company's shares.

For company stakes and unlisted securities, tax applies to gains on disposal, 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 (item 10 of article 50 of Law 91).

Both conditions have stood since Law 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.

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 (article 3 of Law 151). Two conditions apply: the company's market value at the offering, on a fair value basis, must be not less than EGP 50 billion, and the shares offered must be not less than 20% of the company's shares or an offering of shares worth not less than EGP 10 billion.

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.

Property disposals

Law 151 replaced article 42 of Law 91 in full (according to the correction notice published in the Official Gazette, issue 32 bis, on 8 August 2026). Under the substituted text, tax is charged at 2.5% with no reduction on the gross value of the disposal of built 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.

Two provisions in the substituted 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. Such disposals are not treated as a trade unless it is established to the ETA that they were carried on professionally with the intention of trading and making a profit, under item 7 of article 19.

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 is a disposal by sale, bequest, donation or gift to anyone other than an ascendant, spouse or descendant, the creation of a usufruct right over the property, or letting for a term exceeding fifty years. A sale to an ascendant, spouse or descendant is therefore, like a bequest, donation or gift to them, not among the disposals the article makes taxable; the previous text taxed it.

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 are not taxable disposals. Also 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. The detail is in Egypt's property disposal tax after Law 151: rate, deadline, proof.

Settlement of non-final tax, waiver and repeals

Article 4 of Law 151 is a transitional provision allowing businesses and companies whose annual turnover does not exceed EGP 10 million to settle their non-final tax for tax periods beginning 1 January 2023, as corrected by the same notice, to the end of the tax period before March 2025, 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. It is covered in detail in Egypt's Law 151: settling non-final tax for firms up to EGP 10m.

Unpaid capital gains tax on the disposal of shares listed on the Egyptian Exchange during the period from 16 June 2023 until Law 151 came into force is waived, having regard to article 4 of Law 30 of 2023 (article 5 of Law 151).

Article 6 of Law 151 repealed article 18 of Law 91, which 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. The 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 29 bis, 46 bis 5, 46 bis 7 and 49 bis are also repealed, together with article 7 of Law 30 of 2023.

What we recommend

The law refers to the executive regulations in more than one place, and as at 28 October 2026 we had found no decision amending them to implement it. Those places include bad debts, the computation of capital gains and the exclusion of dividends, and those points remain pending that amendment.

• Review the bad debt policy: identify debts that have reached twelve months, schedule those not exceeding EGP 10,000 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 interest limit in force, 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 with turnover up to EGP 10 million: compare the fixed settlement with ordinary assessment before the election, not after, business by business and for each year of the period.

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, 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.