Egyptian Tax Authority Scraps Article 18 to End Arbitrary Assessments and Accelerate Digital Auditing
The Egyptian Tax Authority (ETA) has officially canceled Article 18 of the Income Tax Law as part of recent legislative amendments. The landmark decision effectively removes the legal cover for arbitrary and estimated tax assessments, marking a decisive shift toward a fully digital, document-based auditing system reliant on electronic invoices and receipts.
ETA Head Rasha Abdel Aal stated that the move responds directly to long-standing demands from the business and tax communities. Executed under the directives of Minister of Finance Ahmed Kouchouk, the amendment aims to eliminate a primary source of tax disputes and solidify the Ministry’s comprehensive digital transformation strategy.
Core Regulatory Changes & Mandates
The legislative update introduces sweeping changes to how corporate taxes and bookkeeping are governed in Egypt:
End of Arbitrary Assessments: By abolishing Article 18, the ETA is permanently phasing out estimated profit margins, pivoting entirely to assessments based on actual financial data and verified documents.
Universal Bookkeeping Requirement: The government has eliminated the previous minimum revenue threshold of 500,000 EGP for maintaining official financial records. Consequently, all taxpayers, regardless of size, are now legally obligated to maintain regular books and records to support data-driven tax accounting.
SME Integration & Incentives: Businesses with an annual turnover of up to 20 million EGP are actively encouraged to leverage the simplified tax regime introduced under Law No. 6 of 2025. This framework offers targeted incentives and a streamlined pathway for smaller enterprises to seamlessly integrate into the formal digital economy.
Implementation Timeline
To ensure a smooth transition for the market, the ETA has established a phased rollout for the new auditing paradigm:
Tax PeriodRegulatory Framework
Up to 2027Existing executive decisions and instructions previously issued under Article 18 will remain valid and applicable to ease the transition.
2028 OnwardFull implementation of the new regime. All tax treatments will rely entirely on regular books, financial records, and the national E-Invoicing and E-Receipt systems.