Egypt's simplified tax regime lets a small business pay income tax on what it sells instead of on what it earns. Under Law 6/2025, companies and freelance professionals with annual turnover up to EGP 20 million pay between 0.4% and 1.5% of that turnover and file fewer routine returns. The price is a five-year commitment. A café company in Naama Bay with EGP 1.8 million of sales would owe EGP 9,000 for the year at the 0.5% rate, whatever its costs were.
Below are the regime's numbers as of October 2026: the bands, the exclusions, the filings that change and the ones that don't, then a first test of whether the regime beats normal profit tax for your business. The rates are checked against the text of Law 6/2025, and the sources are listed at the end.
What is the simplified tax regime in Egypt?
Law 6/2025 created a separate income-tax track for smaller businesses. It was published in the Official Gazette on 12 February 2025 and has applied since 1 March 2025. Minister of Finance Decision 420/2025 implements it, including the forms for joining.
Outside the regime, a business works out its taxable profit and pays 22.5% corporate income tax if it is a company, or progressive income tax of up to 27.5% if it is an individual. Our page on Egypt's tax rates for 2026 has the full tables. Inside the regime, profit drops out of the income-tax bill: the business pays a fixed percentage of its annual turnover, set by the band that turnover falls in.
The regime is permanent: Law 6/2025 has no end date. The clock that matters is your own, because once you join you are in for five years.
Why the decision matters more from 2028
The second tax facilitation package (Laws 148–153/2026, in force since 29 July 2026) changed the alternative. Law 151/2026 repealed Article 18 of the Income Tax Law: estimated assessment still applies to tax periods up to 2027, and from 2028 the ETA assesses on books. Law 150/2026 abolished the EGP 500,000 threshold for keeping books, so every business must keep regular books from tax period 2028.
A small business that has been assessed on estimates therefore faces a new comparison from 2028: tax on turnover under Law 6/2025, or profit tax worked out from real books. We cover the books side in Egypt's 2028 bookkeeping requirement and the end of estimated assessment.
Simplified tax regime rates: the five turnover bands
Law 6/2025 sets one rate for each band of annual turnover. The rate applies to sales, not profit, so your costs and your margin play no part in the calculation.
| Annual turnover | Tax on turnover | Example turnover | Tax on the example |
|---|---|---|---|
| Under EGP 500,000 | 0.4% | EGP 400,000 | EGP 1,600 |
| EGP 500,000 to under EGP 2 million | 0.5% | EGP 1,500,000 | EGP 7,500 |
| EGP 2 million to under EGP 3 million | 0.75% | EGP 2,500,000 | EGP 18,750 |
| EGP 3 million to under EGP 10 million | 1% | EGP 6,000,000 | EGP 60,000 |
| EGP 10 million to EGP 20 million | 1.5% | EGP 15,000,000 | EGP 225,000 |
Rates as of October 2026 (Law 6/2025). The examples are plain arithmetic: turnover multiplied by the band's rate.
Two features of the table catch people out.
The rate applies to all of your turnover
The band's rate is not charged slice by slice, the way personal income-tax brackets work. The whole year's turnover is taxed at the rate of the band it lands in, which creates a step at every band edge:
| Annual turnover | Rate | Tax | Step at the edge |
|---|---|---|---|
| EGP 499,000 | 0.4% | EGP 1,996 | |
| EGP 500,000 | 0.5% | EGP 2,500 | + EGP 504 |
| EGP 1,990,000 | 0.5% | EGP 9,950 | |
| EGP 2,000,000 | 0.75% | EGP 15,000 | + EGP 5,050 |
| EGP 2,990,000 | 0.75% | EGP 22,425 | |
| EGP 3,000,000 | 1% | EGP 30,000 | + EGP 7,575 |
| EGP 9,990,000 | 1% | EGP 99,900 | |
| EGP 10,000,000 | 1.5% | EGP 150,000 | + EGP 50,100 |
At the EGP 10 million edge, EGP 10,000 of extra sales costs about EGP 50,000 of extra tax. If your turnover sits near an edge, that step belongs in the decision to join and in your plan for the five years after it. Splitting the business to stay below an edge does not work either: activities created by artificial splitting are excluded from the regime.
The one-time 20% tolerance above EGP 20 million
The ceiling is EGP 20 million, with one cushion. If turnover overshoots by no more than 20%, so up to EGP 24 million, that year is still taxed at 1.5%. The cushion can be used once. A business that expects to pass EGP 20 million within its five years should know, before it joins, what the year after the overshoot would look like.
Who can join Egypt's simplified tax regime?
As of October 2026, Law 6/2025 sets four headline conditions:
- Turnover: EGP 20 million a year or less, with the one-time 20% tolerance described above.
- Type of taxpayer: the law names companies and freelance professionals. A shop or café run in the owner's own name, rather than as a company, is a case to check against its registration before you count on the regime.
- E-documents: the business must comply with e-invoicing and e-receipts. E-invoicing is mandatory for every ETA taxpayer (Decree 323/2022), and in the Sharm El Sheikh area every income-tax and VAT taxpayer selling to consumers has had to issue e-receipts since 1 November 2022 (ETA Decision 484/2022). Our guide to e-receipts in Sharm El Sheikh covers who must issue them and how.
- No exclusion: the business must not fall into one of the excluded groups described in the next section.
Joining means filing the regime's forms, 1/10 and 1/11, and those forms carry the five-year commitment. Treat the filing as you would a contract.
If you are opening a business now, note one detail from the July 2026 package. The new 8-month temporary tax card cannot issue e-invoices; standard activities receive the normal five-year tax card. Because the regime requires e-invoice and e-receipt compliance, check which card you will hold before you plan your first year around Law 6/2025.
Who is excluded from Law 6/2025?
Two exclusions in the law apply whatever the turnover.
Consultancies with one or two main clients
A consultancy that earns 90% or more of its income from one or two clients cannot use the regime. In practice this is the consultant who invoices almost everything to a single hotel group or a single head office.
Artificial splitting
An activity created by artificially splitting an existing business is excluded. Dividing one restaurant into two companies so that each stays under EGP 2 million is the obvious example.
Beyond these, a business is out of reach if its turnover passes EGP 20 million beyond the one-time tolerance, or if it does not comply with e-invoicing and e-receipts. Here is how that reads for some typical Sharm situations:
| Situation | Fits Law 6/2025? | Why |
|---|---|---|
| Café company in Naama Bay, EGP 1.8 million turnover, e-receipts running | Likely | Under EGP 20 million and e-receipt compliant |
| Freelance professional, EGP 900,000 in fees from many clients | Likely | Freelance professionals are covered |
| Consultant billing 95% of fees to one hotel group | No | 90% or more from one or two clients |
| One restaurant split into two companies to keep each under EGP 2 million | No | Artificial splitting |
| Trading company with EGP 26 million turnover | No | Above EGP 20 million and beyond the 20% tolerance |
| Retail company in the Old Market, not yet issuing e-receipts | Not yet | E-invoice and e-receipt compliance is a condition |
| Shop in Hay El Nour run in the owner's own name | Check first | The law names companies and freelance professionals |
"Likely" means the headline conditions are met. The activity, the client mix and the application itself decide the rest.
What does the simplified regime save besides tax?
The rate gets the headlines, but the rest of the package changes the working year as much. Side by side, as of October 2026:
| Normal regime | Simplified regime (Law 6/2025) | |
|---|---|---|
| Income tax | 22.5% of taxable profit (companies); 0% to 27.5% brackets (individuals) | 0.4% to 1.5% of turnover |
| Tax inspection | Normal inspection rules | No inspection for five years |
| VAT returns, if registered | Monthly, by the end of the following month | Quarterly, within the month after the quarter |
| VAT credit refund | After more than four tax periods | After three months |
| Payroll tax filing | Quarterly returns (Form 4) in January, April, July and October, plus the annual settlement | Annual settlement only |
| Withholding on account and advance payments | Local withholding of 1%, 3% or 5% on payments above EGP 300 | Outside both systems |
| Dividend tax | 10% on most dividends paid out | Exempt |
| Stamp tax and development fee | Normal rules | Exempt |
| Notarisation and registration fees | Normal rules | Exempt |
| Capital gains on fixed assets | Normal rules | Exempt |
The inspection holiday is the other half of the lock-in: you commit for five years, and the ETA does not inspect you over the same five years.
On filings, a VAT-registered business files four VAT returns a year instead of twelve, and replaces the four quarterly payroll returns with one annual settlement in January. Because the business sits outside the withholding and advance-payment systems, tax is not collected from it in instalments during the year, which leaves more cash in the business between filings.
The exemptions matter most to owner-managed companies. Under the normal regime, profit you take out of the company is taxed a second time, at 10%, as a dividend. Inside Law 6/2025 that second layer goes, along with stamp tax, the development fee, notarisation and registration fees, and capital gains tax on fixed assets.
What you still owe and file inside the regime
Law 6/2025 changes how income tax is calculated. It does not switch off the rest of the system.
- VAT, if you are registered: 14% standard rate, 5% on machinery and, since 29 July 2026, on medical devices. Registration is compulsory at EGP 500,000 of turnover, and some businesses must register regardless: importers for trade, exporters, distribution agents and suppliers of goods on the table-tax list. Inside the regime you file quarterly and can claim VAT credit refunds after three months.
- E-invoices and e-receipts: still mandatory, and compliance is a condition of the regime.
- Payroll: salary tax on your employees' pay does not go away; the filing becomes one annual settlement. Social insurance (employee 11%, employer 18.75%) and Universal Health Insurance contributions are not on the Law 6/2025 exemption list.
- Books: Law 150/2026 requires every business to keep regular books from tax period 2028, and a tax on turnover still needs a turnover figure your records can support. Our accounting and bookkeeping service keeps books for small businesses in Sharm to a standard that also works under profit tax, which matters on the day you leave Law 6/2025.
The 5-year lock-in: what you commit to
Joining Law 6/2025 is a five-year decision. The regime itself is permanent, so nothing on the law's side forces a review during that time. The five years are yours to plan.
Five years is a long time for a small business in Sharm. A café opens a second outlet; a consultancy wins one contract that soon becomes most of its income. Before you sign, work through these questions:
- Where will turnover be in each of the next five years, and does it cross a band edge or EGP 20 million?
- Do you expect a loss year, for example during a renovation or a weak season? The turnover tax is due on sales even when there is no profit.
- Will you take profits out of the company, and how much? The dividend tax exemption is worth more the more you distribute.
- Could your client base narrow? A consultancy that comes to earn 90% of its income from one or two clients matches the excluded profile exactly.
- Do you plan to sell equipment, vehicles or other fixed assets during the period?
The last piece is the exit: how you would leave the regime if you outgrow it, and what the first year back on profit tax would look like. It is the easiest part to skip, and it decides whether the five years end well.
Simplified regime or normal profit tax: which costs less?
It depends on your margin. For a company, the tax-only comparison is short. The simplified regime charges your band's rate on turnover; corporate income tax charges 22.5% on taxable profit. The two are equal when taxable profit, as a share of turnover, equals the band rate divided by 22.5%.
| Turnover band | Rate | Break-even taxable margin |
|---|---|---|
| Under EGP 500,000 | 0.4% | 1.8% of turnover |
| EGP 500,000 to under EGP 2 million | 0.5% | 2.2% of turnover |
| EGP 2 million to under EGP 3 million | 0.75% | 3.3% of turnover |
| EGP 3 million to under EGP 10 million | 1% | 4.4% of turnover |
| EGP 10 million to EGP 20 million | 1.5% | 6.7% of turnover |
Above the break-even margin the turnover tax is lower; below it, normal profit tax is lower. Two businesses with the same profit can reach opposite answers. In these simplified illustrations, both companies make EGP 270,000 of taxable profit:
- A restaurant company with EGP 1,800,000 turnover (a 15% margin) pays EGP 60,750 in corporate tax at 22.5%, or EGP 9,000 at 0.5% under the simplified regime. If the owners also take the profit out, the normal regime adds 10% dividend tax on what is paid out; Law 6/2025 adds nothing.
- A building-materials trader with EGP 9,000,000 turnover (a 3% margin) still pays EGP 60,750 in corporate tax, but EGP 90,000 at 1% under the simplified regime. On tax alone, the normal regime is EGP 29,250 cheaper.
For freelance professionals, the comparison is with the personal income-tax brackets of Law 7/2024:
| Annual taxable income | Rate |
|---|---|
| Up to EGP 40,000 | 0% |
| EGP 40,000 to 55,000 | 10% |
| EGP 55,000 to 70,000 | 15% |
| EGP 70,000 to 200,000 | 20% |
| EGP 200,000 to 400,000 | 22.5% |
| EGP 400,000 to 1.2 million | 25% |
| Above EGP 1.2 million | 27.5% |
The lower bands are withdrawn once net income passes EGP 600,000. A freelance professional with EGP 1,000,000 in fees and EGP 300,000 of taxable income would pay EGP 52,250 under the brackets, against EGP 5,000 at 0.5% of turnover.
What the break-even test leaves out
The margin test is a first filter, not an answer. It does not capture:
- Undocumented costs. Under the normal regime, costs not backed by an e-invoice or e-receipt are not recognised, so taxable profit can be higher than the profit you actually made. Inside the regime, costs do not enter the calculation.
- Loss years. A company with a loss pays no corporate tax and can carry the loss forward for five years. Inside Law 6/2025, tax is due on turnover whatever the result.
- Distributions. The 10% dividend tax exemption widens the gap in favour of the regime when profits are paid out.
- Growth. A band step, or the EGP 20 million ceiling, inside your five years changes the comparison from one year to the next.
- Time and cash. Quarterly VAT, one payroll settlement, and no withholding or advance payments mean fewer deadlines and less money tied up during the year.
- Open years. Law 151/2026 added a retroactive simplified assessment for businesses with turnover up to EGP 10 million, covering non-final tax periods from 2022 to February 2025. Whether your open years qualify, and whether that helps, depends on your file.
Simplified tax regime in Sharm El Sheikh and South Sinai
The rules of Law 6/2025 are national, but a business in Sharm El Sheikh meets them with a few local facts attached. For the wider picture of running a business here, see our guide to doing business in Sharm El Sheikh.
Check your band before you decide
The quickest first step is our simplified tax regime checker. Answer six questions about your turnover and activity, and it shows whether Law 6/2025 may apply to you and which band and rate you would fall in, without asking for your contact details.
