Egypt's 2025 Tax Overhaul Reshapes Compliance for Trading and Retail Businesses

Egypt moved decisively in 2025 to broaden its tax base and digitise compliance, and the changes land squarely on trading and retail businesses. Three developments stand out for operators in this sector: the simplified tax regime for smaller enterprises under Law No. 6 of 2025, the extension of mandatory electronic receipts to retail sales to final consumers, and the value-added tax amendments introduced by Law No. 157 of 2025. Each carries practical consequences for how a trading or retail business registers, invoices, prices its goods, and files.

Law No. 6 of 2025 was published in the Official Gazette on 12 February 2025 and entered into force the following day. It establishes a simplified, incentive-based regime for enterprises whose annual turnover does not exceed 20 million Egyptian pounds. That threshold captures a large share of Egypt's wholesale distributors, neighbourhood retailers, and emerging online sellers. Rather than taxing net profit in the conventional way, the regime applies a tax calculated on turnover, rising in bands from 0.4 percent for the smallest businesses to 1.5 percent for those approaching the 20 million pound ceiling. The law also relieves qualifying businesses from several burdens that previously weighed on small traders, including stamp tax and registration fees on incorporation documents, capital gains tax on the disposal of fixed assets, and tax on distributed dividends. Bookkeeping obligations are simplified, VAT moves to quarterly rather than monthly filing, and payroll tax becomes an annual settlement.

The relief, however, is conditional. To benefit, a business must file its returns on time and integrate with the Egyptian Tax Authority's electronic systems, specifically electronic invoicing and electronic receipts. A trader cannot claim the simplified rates while operating outside the digital tax infrastructure. This makes the second 2025 development directly relevant to retail.

The Egyptian Tax Authority continued its staged rollout of mandatory electronic receipts for business-to-consumer transactions during 2025. Under Resolution No. 281 of 2025, taxpayers named in the resolution's annex, initially businesses registered at two Cairo tax offices, were required to issue electronic tax receipts and documents for all goods sold and services provided to final consumers starting 15 September 2025. This is the point-of-sale counterpart to the business-to-business electronic invoicing mandate that has applied since 2023. For a retailer, the practical effect is that every counter sale must generate a receipt transmitted to the Authority's platform in or near real time. Only electronically documented sales and purchases are recognised as valid for tax purposes, which means a retailer that fails to integrate risks both rejection of input VAT on its purchases and exclusion from the simplified regime described above. Point-of-sale hardware, enterprise resource planning systems, and accounting workflows generally require configuration to connect to the Authority's interface, and trading businesses should budget time and cost for this integration rather than treat it as a formality.

The third development affects cost structures. Law No. 157 of 2025 amended VAT Law No. 67 of 2016. Construction and contracting services, including supply-and-install arrangements, moved from a 5 percent schedule tax to the general 14 percent VAT rate, with the offsetting benefit that input VAT on those services may now be recovered. Advertising services became broadly subject to the 14 percent rate, with only a narrow exemption preserved for advertising tied to donations for treatment and medical care at non-profit hospitals. The law also increased fixed tax amounts on cigarettes and restructured the taxation of alcoholic beverages and certain other goods. For retailers, the upshot is twofold: the cost of fitting out stores and of advertising campaigns now carries 14 percent VAT, recoverable where the retailer is registered and the input relates to taxable supplies, while businesses dealing in affected excisable goods must update shelf pricing and margin calculations.

Mandatory digital filing through the electronic tax portal now covers corporate income tax, payroll tax, VAT, and withholding tax, with the Authority signalling stricter enforcement of late filing and of the correct VAT treatment of goods versus services. Trading businesses that historically blurred these lines should expect closer scrutiny.

The contrast with the United Arab Emirates is instructive for groups operating across both markets. The Emirates levies a federal corporate tax of 9 percent on profits above 375,000 dirhams, with a Small Business Relief that lets resident businesses below a 3 million dirham revenue threshold elect zero taxable income, a relief legislated to apply for tax periods ending on or before 31 December 2026. On electronic invoicing, the Emirates is following Egypt with a lag: pilot testing is expected in mid-2026, with mandatory adoption phased in for larger businesses from January 2027. A retailer with operations in both jurisdictions therefore faces a mature, enforced electronic documentation regime in Egypt today and a looming but not yet binding one in the Emirates.

The practical agenda for a trading or retail business in Egypt is clear. Confirm whether turnover falls within the Law No. 6 threshold and whether the simplified regime is advantageous against conventional profit taxation. Verify electronic invoicing and electronic receipt integration, since it is now a gateway to both incentives and input VAT recovery. Recalculate pricing and recoverable VAT on store construction, fit-out, and advertising under the new rates. Partners and finance leads should treat 2025 as a year in which compliance posture, not merely the headline tax rate, determines a retailer's effective tax cost.