Egypt enacts second tax facilitation package with significant VAT and compliance changes

Summary

Egypt published its second tax facilitation package in the Official Gazette on 28 July 2026. Law No. 149 of 2026 amends the VAT Law, while related legislation changes tax procedures, income tax, stamp duty and state development fees. The measures generally took effect on 29 July 2026. [eta.gov.eg], [eta.gov.eg]
The VAT amendments expand relief for production machinery, equipment and qualifying medical devices, extend the maximum suspension period to three years, accelerate refunds of persistent VAT credit balances and exempt services connected with goods transported in transit under customs supervision. [eta.gov.eg]
Businesses should reassess capital expenditure, VAT recovery, natural-gas purchases, property leases and transit arrangements. Executive Regulations are expected to clarify several operational points, particularly the treatment of premises used as an independent business headquarters and the procedures for obtaining exemption after VAT has initially been suspended. [eta.gov.eg]

Article

The Egyptian Government has enacted a second tax facilitation package comprising Laws Nos. 148 to 153 of 2026. The legislation was published in Official Gazette Issue No. 30 Bis (A) on 28 July 2026 and generally became effective on the following day, unless a provision specifies otherwise. The package covers VAT, income tax, unified tax procedures, stamp duty, state development fees and the settlement of tax disputes. [egypttoday.com]

For indirect tax purposes, Law No. 149 of 2026 introduces several material amendments. Machinery, equipment and devices used for medical purposes in producing goods or supplying services are subject to the reduced 5% VAT rate, subject to the statutory conditions. The VAT suspension mechanism for imported or locally purchased production assets has also been expanded to include qualifying medical devices used by factories and production units in industrial production. [eta.gov.eg]

The suspension initially applies for one year and may be extended, where justified and accepted by the Egyptian Tax Authority, for a total period not exceeding three years. If the authority verifies that the assets were used in industrial production during the permitted period, the suspended VAT is treated as exempt. A five-year monitoring condition applies. Disposal or use of the assets for another purpose during that period may trigger notification and VAT payment obligations. If the assets are not put into qualifying industrial use within the permitted period, the suspended VAT and additional tax become payable. [eta.gov.eg]

The package also improves the recovery timeline for accumulated VAT credits. A credit balance may now qualify for refund after more than four consecutive tax periods, compared with more than six periods previously. For qualifying taxpayers governed by Law No. 6 of 2025 whose annual turnover does not exceed EGP20 million, a refund may become available after more than three months. This change may reduce trapped cash, although businesses will still need complete reconciliations and supporting documentation. [eta.gov.eg]

Goods transported in transit were already relieved from VAT, and the exemption now expressly extends to related services where transportation occurs under Egyptian Customs supervision and in accordance with the Customs Law. This may benefit logistics operators, freight providers and businesses using Egypt as a transit corridor. [eta.gov.eg]

Other changes require careful review. Natural gas has been removed from the VAT exemption list and is subject to schedule tax of EGP20 per 1,000 cubic feet. The exemption for financial services has been expanded to include relevant services supervised by the Central Bank of Egypt. The property exemption has also been narrowed regarding leases of buildings or units used as an independent headquarters for business activity. The precise scope of this exclusion remains unclear and is expected to be addressed in the Executive Regulations.

Businesses should update VAT determination logic, capital-expenditure procedures, refund files, lease classifications and transit documentation. They should also monitor the Executive Regulations and the correction notice published by the Egyptian Tax Authority in relation to Laws Nos. 149, 150 and 151 of 2026. [eta.gov.eg], [eta.gov.eg]

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Egypt Enacts Major VAT Amendments Covering Medical Devices, Leasing, Gas, and Financial Services

Egypt’s Law No. 149 of 2026 amends VAT rules, introducing major changes across multiple sectors.
Medical devices used in production/services now have a reduced 5% VAT; kidney dialysis inputs and equipment are fully exempt.
Non-residential building leases are now subject to 14% VAT, while financial services get a unified VAT exemption and natural gas is moved to a schedule tax.
Soaps, industrial detergents, and gypsum are shifted to the standard 14% VAT, while services on goods in transit are now non-subject to VAT.
VAT credit refund periods are shortened from six to four tax periods, or three months for qualifying small businesses.

Source: regfollower.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.