On 12 February 2025, Egypt has enacted its new tax reconciliation law No. 5 of 2025 (the “New Tax Reconciliation Law”) which encourages the settlement and reconciliation of certain tax disputes and filings.
The New Tax Reconciliation Law was published in the Official Gazette on 12 February 2025 and entered into force the following day.
I. Incentives for non-registered taxpayers
Individuals and entities that were not registered before the Egyptian Tax Authority (the “ETA”) before the entry into force of the New Tax Reconciliation Law, may request their registration for Income Tax and Value Added Tax, within the three months following the entry into force of the New Tax Reconciliation Law. This period may be extended only once by virtue of a decree from the Minister of Finance. Where such persons register themselves within the timeframe described above, no income tax, VAT, stamp tax or State Financial Sources Development Fee shall apply on them for the period preceding the law’s entry into force.
In this regard, such individuals and entities shall register themselves at the government tax E-Systems. Moreover, they may only benefit from the foregoing incentive provided that the ETA has not taken any action before them before the entry into force of the New Tax Reconciliation Law.
II. Incentives for registered taxpayers
The penalties set out under the Unified Tax Law, as well as other penalty set forth under any other tax law, shall not apply on taxpayers that did not make their tax filings for any period starting from the beginning of 2020 till the entry into force of the New Tax Reconciliation Law.
In addition, taxpayers that made their tax filings for any period from the beginning of 2020 till the entry into force of the New Tax Reconciliation Law, may submit adjusted filings in the event an information or detail are missing thereunder or where the tax filings contained an error. In such case, they shall benefit from the no-penalty benefit described above, including any delay fines.
The enjoyment of the above incentive is conditional upon making said filings within six months from the entry into force of the New Tax Reconciliation Law.
III. Incentives for taxpayers in relation to whom the ETA estimated the tax
Where the ETA undertook a tax estimation for taxpayers for the period preceding 1 January 2020, such taxpayers may request termination of the dispute’s proceedings, regardless of their stage, on the condition of the following:
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- Payment of a tax equal to 30% of the taxes due under filings relating to the period subject of dispute, without prejudice to the duty to pay taxes under the tax filing itself; or
- Payment of 140% of the tax due under the latest tax arrangement/agreement before the period(s) subject of dispute, where (i) no tax filings were made with respect to the period subject of dispute, (ii) tax filings were made with respect to tax period subject of dispute, absent a due tax, or (iii) tax filings were made with respect to the period subject of dispute, but which reflects tax losses.
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Payment of the above amounts may be made in installments, at the milestones set out under the New Tax Reconciliation Law, without delay penalties or additional tax falling due on such installments
IV. Incentives for taxpayers in relation to whom the ETA undertook an inspection based on their books and records
Where the ETA undertook an inspection for any tax periods preceding 1 January 2020 based on taxpayer’s books and records, the taxpayers may request termination and settlement of the dispute’s proceedings, provided they pay the entire tax debt within the three months following the request to terminate the proceedings. In such case, the entire delay fine, additional taxes and any other amounts shall be forfeited.
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