Egypt

In order for expenses to be acceptable for tax deduction, such expenses must be:

• actual and supported by documents (i.e. taxpayers should support their expenses and costs with electronic invoices and electronic receipts to be considered deductible costs from a corporate tax perspective).
• business related, and
• necessary for performing the company’s activity.

Depreciation and amortisation

The tax law set the depreciation and amortisation rates for tax purposes to the following:

• 5% of the cost of purchasing, establishing, developing, and renovating buildings and establishments is deductible based on the straight-line method.
• 10% of the cost of purchasing, developing, and improving intangible assets is deductible based on the straight-line method.
• Computers, information systems, software, and data storage sets are depreciated at a 50% rate on a declining-balance method.
• All others assets are depreciated at a rate of 25% of the depreciation basis for each fiscal year, on a declining-balance method.

Accelerated depreciation

A company may have the option to deduct 30% accelerated depreciation from the value of the machines and equipment used in industries during the first fiscal year of their employment. This should be done by submitting a request to the tax authority prior to deducting the 30% accelerated depreciation.

Goodwill

According to Article 25 of the Egyptian Income Tax Law, goodwill is amortised at the rate of 10% using the straight-line method.

Start-up expenses

Start-up expenses are tax deductible, and the whole amount can be amortised for the first year.

Interest expenses

The interest expense should comply with the local thin capitalisation rules. Prior to the amendments introduced by Law No. 151 of 2026, the applicable debt-to-equity ratio is subject to a phased reduction as follows: 

• 3:1 for FY 2024 to 2027.
• 2:1 for FY 2028 onwards.
• The Egyptian transfer pricing rules (i.e. arm’s-length principle) are being followed (see Transfer pricing in the Group taxation section for more information). In case of a tax audit, if the interest rate isn’t proven to be at arm’s length, the tax authority has the right to adjust this price to arrive at the 'arm's-length price' and re-calculate the taxes due accordingly.

Law No. 151 of 2026 amended the thin capitalisation rules by introducing a general debt-to-equity ratio of 2:1. Accordingly, interest paid on loans and advances exceeding twice the average equity, determined based on financial statements prepared in accordance with Egyptian Accounting Standards, is not deductible for tax purposes. 

A higher debt-to-equity ratio of 4:1 applies to Juridical persons implementing qualifying national infrastructure projects, provided that:

• the national infrastructure project is designated by a Prime Ministerial decree based on the recommendation of the Minister of Finance; 

• the relevant loans and advances are obtained from unrelated parties; and 

• the Juridical person's participation in such national infrastructure projects represents at least 25% of its total investments. 

The application of the 4:1 ratio ceases upon expiry of the relevant loans and completion of the principal works of the qualifying national infrastructure project. 

• This provision shall not apply to banks and insurance companies or companies exercising the financing activities to be determined by a ministerial decreedecision.

Bad debt

According to Article 28 of the Egyptian Income Tax Law, bad debts may be deductible for tax purposes, subject to the submission of a report from the external auditor confirming that the following conditions have been met: 

• The company maintains regular books and records. 

• The debt relates to the company's activities. 

• The amount of the debt has previously been recognised in the company's accounts and records. 

• The company has taken serious procedures to collect the debt and has been unable to recover it after 12 months from its due date. 

Serious debt-collection procedures include obtaining a payment order, where applicable; obtaining a first-instance court judgement requiring the debtor to pay the debt; or claiming the debt as part of bankruptcy proceedings or a preventive composition with creditors. 

The requirement to undertake serious debt-collection procedures does not apply to bad debts not exceeding EGP 10,000 per debt, provided that the aggregate amount of such bad debts does not exceed 1% of the taxpayer's total receivables balance at the end of the tax year, subject to the procedures prescribed by the Executive Regulations. 

Charitable contributions

Donations to the government are tax deductible. Donations to Egyptian charities are also deductible, but only up to 10% of taxable income.

Fines and penalties

Financial fines and penalties paid by the taxpayer because they or one of their subordinates has committed a deliberate felony or misdemeanour are not deductible.

Taxes

Income tax payable according to the Income Tax Law is not deductible.

Other significant items

The following other items are not deductible:

• Reserves and appropriations of all different types.
• Profit shares, distributed dividends, and the attendance fees paid to shareholders for attending the general assembly’s meetings.
• Compensation and allowances obtained by the chairmen and board members.
• Workers profit share to be distributed according to the law.

Net operating losses

A company may carry losses forward for a period not to exceed five years. Nevertheless, if a change occurs in the ownership of its capital exceeding 50% of the shares, stocks, or the voting rights, if the company is either a joint-stock company or a company limited by shares whose shares are not listed on the Egyptian Stock of Exchange, and if the company changes its activity, the company cannot carry the losses forward.

In general, companies cannot carry losses back, except for contracting companies (i.e. in case of long-term projects), which are allowed a loss carryback for an unlimited period of time (to the extent of the duration of the contract).

Payments to head office

A branch may deduct head-office charges of up to 10% of its taxable income. Moreover, the branch or subsidiary should withhold taxes before the payment of interest, royalties, and service fees to non-resident foreign corporations or affiliates.