The Egyptian Cabinet approved a draft decision on Wednesday to implement a regulatory framework that cancels many tax and fee exemptions for state entities, in accordance with a key condition set by the International Monetary Fund (IMF) in the $3 billion agreement signed a year ago. The government approved the draft law in June but has not yet defined the necessary executive regulations for implementation.
In a financial support agreement worth $3 billion signed in December 2022, the IMF urged Egypt to achieve equality and promote fair competition between the public and private sectors. The agreement fell into dormancy after Egypt failed to fulfill other commitments, including allowing the exchange rate of the pound to move in response to market forces, swiftly selling some state assets, and reducing the government’s role in the economy.
The government stated that the ruling to eliminate tax and fee exemptions "applies to all investment or economic activities undertaken by state entities." It added that these entities include "units of the state administrative apparatus, local administration units, national and service public authorities, economic authorities, and agencies with special budgets, as well as entities and companies owned by any of the aforementioned entities either directly or indirectly, regardless of their legal form."
It also mentioned entities and companies in which any of these authorities holds any ownership stake, whether directly or indirectly, regardless of the percentage of this stake and the nature of the activity of the entity or company contributing to the entity or company, or the use of funds generated from conducting the investment or economic activity.
The statement further clarified that this does not apply "to exemptions granted for military activities and duties, and to the necessities of state defense and national security."
