Egyptian President Abdel Fattah El-Sisi has approved a proposal to issue tax certificates, or tax sukuk, that taxpayers could later offset against their future tax liabilities, as the government seeks to diversify financing sources and reduce debt-servicing costs, according to a Presidency statement.

Under the proposed mechanism, taxpayers would provide funds to the government in exchange for certificates offering what the Presidency described as a “favorable and suitable yield.” The certificate value would then be deducted from future tax obligations.

The proposal was approved during a meeting in New Alamein City attended by Prime Minister Mostafa Madbouly and Finance Minister Ahmed Kouchouk, where officials reviewed Egypt’s fiscal performance, public debt and tax reform efforts.

The Presidency said the instrument is intended to reduce the government’s financing requirements and, in turn, lower its debt-servicing burden. Details on the structure, eligibility and implementation of the tax sukuk have not yet been announced.

Fiscal performance

During the meeting, Kouchouk reported that Egypt’s real gross domestic product (GD) grew 5.2% in the first nine months of fiscal year 2025/26. He also highlighted a decline in external debt among budget-sector entities, higher non-tax revenues and an expansion of the tax base through simplified and automated procedures.

Financial markets have also improved, according to the minister, with stronger performance by the Egyptian Exchange, lower sovereign default-insurance costs and declining yields on government bonds.

Presidential spokesman Mohamed El-Shennawy said budget-sector debt as a percentage of GDP had declined by approximately 13.2 percentage points over the past two years. The government is targeting further reductions to create additional fiscal space.

Tax reform

The proposed tax sukuk come as Egypt continues to implement a tax reform and facilitation program launched in 2024.

Kouchouk said the laws included in the second package of tax facilitation measures have entered into force following presidential ratification. The package aims to simplify procedures, reduce compliance burdens and strengthen the investment environment.

El-Sisi also directed the government to continue improving tax services and develop a third package of tax facilitation measures.

The government is also expanding the digitalization of tax administration. Kouchouk reviewed the implementation of a real estate tax facilitation package, including a mobile application for real estate tax services, and said a similar application for real estate disposal tax would be launched in the coming days.

New financing mechanism

The proposed tax sukuk would provide the government with financing upfront while allowing taxpayers to offset the certificates against future tax liabilities. This distinguishes the mechanism from conventional government securities, although the Presidency has not yet provided detailed terms.

The proposal adds a new financing instrument to Egypt’s broader efforts to reduce public debt and financing costs while expanding the tax base and modernizing tax administration.