Egypt Unveils Second Tax Facility Package: Stamp Duty Replaces Capital Gains, VAT Cuts for Healthcare and Industry

Egypt is set to implement a significant second package of tax reforms designed to invigorate its capital markets and bolster key industrial and healthcare sectors. The measures, announced by Minister of Finance Ahmed Kouchouk, include replacing the capital gains tax on stock market transactions with a stamp duty and substantially reducing the Value Added Tax (VAT) on medical devices.

During a high-level meeting with Prime Minister Mostafa Madbouly and Deputy Prime Minister for Economic Affairs Hussein Issa, Minister Kouchouk detailed the package’s objectives: attracting investment and alleviating business operational burdens. Prime Minister Madbouly affirmed the government’s commitment to ensuring the successful rollout of these initiatives, aiming to enhance taxpayer services.

For the capital markets, a key incentive will be introduced to encourage companies to list on the Egyptian Exchange. This three-year incentive is projected to boost trading volumes and attract further investment. The shift from a capital gains tax to a stamp duty is specifically intended to stimulate market activity.

The industrial and healthcare sectors are also set to benefit. The suspension of VAT payments on machinery and equipment for industrial production and medical devices will be extended to four years, doubling the current two-year period. Furthermore, medical devices will see their VAT rate slashed from 14% to 5%. Inputs for kidney dialysis machines, along with associated filters, parts, and supplies, will receive a full VAT exemption.

Broader relief for the business community includes the deduction of the solidarity contribution from the tax base, thereby reducing the financial strain on all taxpayers. The tax dispute resolution law will also be renewed until the end of December, promoting the voluntary settlement of a greater number of tax disputes.

In the real estate sector, the property disposition tax for individuals will remain at 2.5% of the sale value. However, the new package introduces a complete exemption for property transfers between spouses, children, and direct descendants.

Minister Kouchouk articulated the ministry’s vision for a tax environment characterised by simplification and incentivisation, akin to a “customer service” model. Tax offices are reportedly prepared for the precise and flexible implementation of these measures upon the official issuance of the governing laws. These reforms signal a strategic move by the Egyptian government to foster a more attractive and supportive business climate for both domestic and international investors.

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