Egyptian Tax Authority repeals Article 18 to end arbitrary accounting

Rasha Abdel Aal, head of the Egyptian Tax Authority, has announced the repeal of Article 18 of the Income Tax Law as part of recent legislative amendments. This move eliminates the legal basis for issuing instructions regarding net profit percentages and estimated or arbitrary accounting.

The reform aims to end tax disputes caused by arbitrary assessments and to strengthen digital transformation. Moving forward, the authority will rely on electronic and documentary examinations based on digital invoices and receipts. While existing executive instructions under Article 18 will remain valid for tax periods up to 2027, full implementation of tax treatment based on regular books, records, and digital systems will begin in the 2028 tax period.

Additionally, the new legislation removes the previous 500,000 EGP minimum threshold for mandatory bookkeeping, meaning all taxpayers are now legally required to maintain regular books and records. Small businesses with annual turnovers not exceeding 20 million EGP are encouraged to utilize the simplified tax system and incentives provided under Law No. 6 of 2025 to facilitate their integration into the formal economy.