State-owned companies in Egypt: 5% of profits to the Treasury
5% of distributable profits is set aside before any reserves, and 4% where the State holds over 50%. Proceeds go to the Treasury within four months of year end.
Executive summary
- Law No. 154 of 2026, on the passing of a percentage of the net profits of companies owned by the State or by public juridical persons to the State's public treasury, was published in the Official Gazette, issue No. 30 bis (A), on 28 July 2026 and applies from the day following its publication.
- A company wholly owned by the State or by public juridical persons: 5% set aside from distributable net profits.
- A company in which the State participates partially at more than 50%: a percentage equal to 4% is collected, and deducted in full from the State's share.
- The appropriation is made after covering carried-forward losses and before setting aside any reserves — that is, before the legal reserve.
- Proceeds pass to the public treasury within four months of the financial year end, and are treated as tax revenue.
- Its reach goes beyond wholly state-owned companies: it applies to any company in which the State or public juridical persons hold more than 50% of the capital, including joint ventures with government bodies where their share exceeds that level.
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.
The two cases
| Wholly owned | State holding over 50% | |
|---|---|---|
| Rate | 5% of distributable net profits | 4% of distributable net profits |
| Timing | After covering carried-forward losses and before setting aside any reserves | After the general assembly approves the financial statements, and after covering carried-forward losses and before setting aside any reserves |
| Cap | — | Not exceeding the State's share of those profits |
| Who bears it | The company | Deducted in full from the share of the State or public juridical persons in net profits |
| Mechanism | Set aside | Collected |
The difference between "setting aside" in the first case and "collecting" in the second is not merely verbal. In the first the percentage comes out of the company's profits, which are wholly the State's in any event; in the second it is collected from the State's share alone, so the other shareholders do not bear it.
The ordering is the operative point
The text requires the appropriation to be made after covering carried-forward losses and before setting aside any reserves.
The percentage is therefore computed and appropriated before the legal reserve, not after. That changes the structure of the statement of changes in equity for every company within the law. On the apparent meaning of the words, the legal reserve is then computed on what remains after the percentage is taken, unless implementing decisions provide otherwise.
Any profit appropriation schedule built on the usual order — cover losses, legal reserve, other reserves, distributions — has to be rebuilt with this percentage in its new position.
Its nature and its deadline
The text describes the percentage as tax revenue, whose proceeds pass to the State's public treasury in support of its resources within four months of the date the financial year closes.
In the second case collection is tied to the general assembly's approval of the financial statements, so the date the assembly meets becomes part of meeting the deadline rather than a separate procedural matter.
Two exclusions
Companies established in implementation of international agreements — article 1 opens with the words "without prejudice to companies established in implementation of international agreements".
A temporary exemption by Cabinet decision — for social or economic necessities required by the public interest, certain companies may be exempted for a temporary period from the application of this law, by decision of the Cabinet upon the proposal of the Minister of Finance.
What this requires
- Rebuild the profit appropriation schedule with the percentage after covering carried-forward losses and before the legal reserve, and review the legal reserve base in that light.
- Determine which case applies: wholly owned (5%, set aside) or a State holding over 50% (4%, collected from the State's share and not exceeding it).
- In partially held companies, set the timing of the general assembly so that collection and remittance can be made within four months of the financial year end.
- Review presentation and disclosure in the financial statements of a percentage the law describes as tax revenue and which is taken out of distributable profits.
- For companies established under international agreements: document the basis on which the law does not apply.
The firm's Tax Department reviews a company's position under this law and its effect on the order of profit appropriation and on the financial statements.
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
Partner profile · Book a consultation
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.