Egypt’s Tax Reforms Unlock Billions, Raising Questions About Military’s Economic Role

In a significant, albeit overdue, development, Egypt’s Ministry of Finance has released data revealing substantial tax revenue generated from state-owned enterprises following the removal of tax exemptions implemented through reforms in 2024. The data indicates that these enterprises contributed 67 billion Egyptian pounds (approximately US$1.4 billion) in tax revenue for the fiscal year 2024/25, with projections estimating 87 billion pounds (US$1.7 billion) for 2025/26 Human Rights Watch.

Military Businesses as Key Contributors

While Human Rights Watch notes it cannot independently verify the government’s figures, the published data highlights that a significant portion of this revenue originates from a limited number of military-owned businesses, including cement factories and military social and sporting clubs Human Rights Watch. This marks a departure from decades of practice where these entities largely operated outside of civilian oversight, transparency requirements, and taxation.

Expansion of Military’s Economic Influence

Since President Abdel Fattah al-Sisi came to power in 2014, the Egyptian military has dramatically expanded its presence in the civilian economy, operating in diverse sectors ranging from poultry to gas stations Human Rights Watch. This expansion has allowed the military to generate revenue independent of the state budget and consolidate control over civilian life.

IMF and Tax Reform Commitments

The move towards taxing state-owned enterprises is linked to commitments made to the International Monetary Fund (IMF) as part of an ongoing program. The Egyptian government pledged to publish the cost of tax exemptions for these enterprises and enacted legal amendments in 2023 and 2024 to remove those exemptions, although exceptions remain for defense and national security concerns Human Rights Watch. Recently, the IMF approved the release of US$2.27 billion as part of an overall US$8 billion deal Human Rights Watch.

Implications for Human Rights and Public Spending

Advocates argue that taxing military businesses demonstrates the potential for increased government revenue that could be directed towards essential social services. A government report from April 2024, published under the IMF program, estimated that total revenue lost to tax exemptions, including those for state-owned enterprises, amounted to 3 to 4.5 percent of Egypt’s GDP Human Rights Watch. In contrast, the country’s 2025/26 education budget is only 1.5 percent of GDP. This highlights the potential for reallocating resources to critical areas like education and healthcare, which have faced underfunding and negatively impacted rights to these services.

The increased tax revenue underscores the transformative potential of tax policy in supporting human rights. However, realizing this potential requires ensuring that the revenue is strategically allocated to increase spending on rights-based programs, leading to tangible improvements in health, education, and social security.