Driving Forces Behind the Revenue Growth

The Ministry of Finance attributes this impressive growth to a combination of factors, including enhanced collaboration with the business community and the successful implementation of recent tax reform initiatives. These reforms have demonstrably strengthened income tax performance and boosted proceeds from commercial and industrial sectors. Crucially, incentives designed to support small and medium-sized enterprises (SMEs) appear to be yielding positive results.

Amendments to the Value Added Tax (VAT) law have also played a key role, leading to increased collections on both locally produced goods and services. Furthermore, the ongoing digitization of tax administration processes has improved efficiency and broadened the tax base, contributing to the overall revenue increase. This modernization effort reflects a broader commitment to transparency and accountability within the Egyptian tax system.

Income Tax Leads the Charge

A particularly notable increase was observed in income tax revenues, which surged by approximately EGP 167 billion – a 46.5% rise – reaching a total of EGP 526.7 billion. This growth was fueled by a EGP 39.8 billion increase in payroll taxes, bringing the total to EGP 149.7 billion, and a EGP 23.2 billion rise in taxes levied on commercial and industrial activity, now totaling EGP 69.9 billion. Revenues from non-commercial professions also experienced substantial growth, climbing 46.9% to EGP 11.6 billion, while corporate tax receipts saw a significant 53% increase, reaching EGP 290.4 billion.

VAT and Property Tax Contributions

Value Added Tax (VAT) revenues also contributed significantly to the overall increase, rising by EGP 129.2 billion, or 22.5%, to EGP 702.4 billion. VAT collected on goods increased by 14.2% to EGP 374 billion, while VAT on services advanced by a more substantial 31.5% to EGP 100.8 billion. Property tax revenues also saw a healthy increase, rising by EGP 58.7 billion, or 27.7%, to EGP 270.8 billion. Taxes on international trade grew by EGP 10.3 billion, or 13%, reaching EGP 89.5 billion.

Beyond direct taxation, non-tax revenues also experienced robust growth, increasing by EGP 192.7 billion to reach EGP 400.8 billion. This demonstrates a diversification of revenue streams and a strengthening of the overall fiscal position.

Budget Surplus and Deficit Reduction

The positive revenue performance has translated into a significant improvement in the state budget’s primary surplus, which rose to EGP 656.8 billion, equivalent to 3.1% of GDP, compared to EGP 330 billion, or 1.8% of GDP, in the same period last year. The overall budget deficit also narrowed, standing at EGP 974.5 billion, or 4.6% of GDP, compared to EGP 879.3 billion, or 4.8% of GDP, a year earlier. The Ministry of Finance directly attributes this improvement to the substantial growth in tax revenues.

The government is also actively pursuing strategies to manage public spending and enhance debt management. These efforts include diversifying financing sources, reducing reliance on the Treasury Single Account, and adhering to statutory spending limits. A cap on public investment spending of EGP 1.2 trillion has been introduced for FY 2025/2026.

Total public revenues increased by 39.7%, or EGP 573 billion, to EGP 2.015 trillion, up from EGP 1.442 trillion. Tax revenues account for approximately 80% of this total, with non-tax revenues contributing the remaining 19.9%. However, total public expenditure also rose, increasing by EGP 645.8 billion, or 28%, to EGP 2.954 trillion, compared to EGP 2.308 trillion in the previous fiscal year.

What long-term impact will these fiscal adjustments have on Egypt’s economic trajectory? And how will the government balance increased spending with its commitment to fiscal discipline?

Frequently Asked Questions About Egypt’s Tax Revenue Increase

• What is driving the increase in tax revenues in Egypt?

  The increase is primarily driven by tax reform packages, improved engagement with the business community, VAT law amendments, and the automation of tax systems.

• How has income tax contributed to the overall revenue growth?

  Income tax revenues surged by 46.5%, contributing significantly to the overall increase, with notable gains in payroll taxes, commercial/industrial taxes, and corporate tax receipts.

• What impact has the VAT law had on tax collections?

  Amendments to the VAT law have led to higher collections on locally produced goods and services, contributing to a 22.5% increase in overall VAT revenues.

• What is the current state of Egypt’s budget deficit?

  The overall budget deficit has narrowed to 4.6% of GDP, a decrease from 4.8% in the previous year, largely due to the strong growth in tax revenues.

• What measures is the government taking to manage public spending?

  The government is diversifying financing sources, limiting reliance on the Treasury Single Account, adhering to statutory limits, and implementing a cap on public investment spending.