Egypt Daily News – President Abdel Fattah El-Sisi has ratified a new legislative amendment to Egypt’s Value Added Tax (VAT) Law under Law No. 157 of 2025, dated July 17, 2025. The amendment introduces increased tax rates on cigarettes, alcoholic beverages, and for the first time, applies a new 10% VAT on crude oil.
Under the new law, cigarette prices will see an annual tax increase of 12.5% starting in November 2025 and continuing for three years. The changes also include higher VAT rates on alcoholic beverages as part of broader fiscal reforms.
Objectives of the Legislative Amendment
According to the Egyptian Tax Authority, the amendment introduces targeted changes to expand the tax base and correct existing distortions. The reforms aim to enhance the government’s capacity to finance increased investments in human development.
Officials noted that the modifications also reflect feedback from representatives of several productive sectors, and stressed that core tax exemptions remain intact. Essential goods, food items, healthcare services, and educational services will continue to be exempt from VAT. Additionally, the general VAT rate remains unchanged.
Boosting Tax Revenues
In an official statement, the Tax Authority emphasized that the changes aim to promote tax equity and support the integration of more businesses into the electronic tax systems. The reform aligns with standards set by the World Health Organization (WHO), the World Tourism Organization, and other international benchmarks.
The statement also noted a shift in how construction services are taxed. Instead of a fixed 5% schedule tax, construction companies will now be subject to the standard VAT rate. However, they will be able to deduct VAT paid on both goods and services used in their operations. This could potentially reduce overall costs, as contractors will have the right to reclaim VAT on machinery and equipment essential to their services. Encouraging contractors to formalize purchases and claim tax credits is expected to help broaden the tax base.
Revenue Expectations for the New Fiscal Year
The Ministry of Finance projects a 31.3% increase in total tax revenues for the upcoming 2025–2026 fiscal year, which begins in July. Revenues are expected to reach EGP 2.6 trillion, up from EGP 2 trillion targeted for the current fiscal year ending this June.
A source from the House of Representatives’ Budget and Planning Committee told Al-Shorouk newspaper that the VAT amendments alone are expected to generate up to EGP 100 billion in additional revenue.
The tax reforms reflect the government’s ongoing efforts to stabilize public finances, boost revenue without altering core exemptions, and align the country’s tax structure with international standards.
