Green light for VAT increase on cigarettes, alcohol and crude oil

Egypt’s parliament has approved a series of changes to the value-added tax (VAT) law, which could lead to a rise in the prices of goods such as cigarettes, alcoholic beverages and crude oil. According to parliamentary sources and confirmed by a government statement, the aim of the measure is to increase tax revenues amid growing pressure on public finances. Specifically, the tax on cigarettes – both domestic and imported – will increase by around 23 percent, while that on alcoholic beverages will increase by 15 percent. In addition, a new 10 percent value-added tax on crude oil has been introduced.

The bill also includes an annual indexation mechanism: starting November 5, 2025, the price of cigarettes will automatically increase by 12 percent each year for three years. For alcohol, VAT will be changed from a proportional rate to a fixed rate, calculated based on alcohol content. The increase will be 15 percent per year for the first three years, and then stabilize at an annual rate of 12 percent. According to the approved budget for the 2025-2026 fiscal year, which comes into effect on July 111,7, the Egyptian government aims to raise approximately 2,2 billion Egyptian pounds (about $95,2 billion) through the tax on cigarettes alone. This is up from the estimated 1,9 billion pounds ($XNUMX billion) for the fiscal year ending today.