A Strategic Roadmap for Egypt Toward QDMTT Implementation

Within the MENA and African regions, countries such as Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman have either enacted or announced Pillar Two implementation starting from 2025. In Africa, countries including South Africa, Nigeria, and Kenya are also actively preparing frameworks to align with the global minimum tax regime, including Qualified Domestic Minimum Top-up Tax (QDMTT) regulations.

Egypt, however, remains in an early positioning phase, having yet to issue domestic laws or executive regulations to capture top-up taxing rights before they are forfeited to ultimate parent jurisdictions. This delay places Egypt at risk of significant tax revenue leakage and diminishes its control over how multinationals operating locally are taxed. The following roadmap outlines key steps Egypt can take to move from legislative planning to the practical execution of QDMTT.

Step 1: Enact the Domestic Framework

Egypt must first issue legislation that clearly defines in-scope Multinational Enterprise (MNE) Groups, stipulates a 15% Minimum Effective Tax Rate (ETR), and sets a firm date for implementation (e.g., 1 January 2026). The law should explicitly apply to MNE groups with consolidated annual revenues exceeding EUR 750 million. This foundational step signals Egypt’s formal commitment to global tax standards and secures its right to impose the top-up tax domestically before such rights are ceded under mechanisms like the Income Inclusion Rule (IIR) or the Undertaxed Profits Rule (UTPR).

Step 2: Translate the Law into Practice with Executive Regulations

Once legislation is enacted, detailed executive regulations are essential to make it operational. These should cover registration procedures, tax return deadlines, the calculation of ETR and top-up tax, acceptable documentation formats, exchange rate treatment, and audit and enforcement mechanisms. These regulations act as the bridge between policy and practice, offering clarity for both taxpayers and tax authorities while reducing administrative burdens.

Step 3: Clarify Scope of Application

The regulatory framework should define which businesses are covered by the new rules. This includes MNE groups that have exceeded EUR 750 million in revenue in at least two of the last four years and any Egyptian entities—subsidiaries, branches, or joint ventures—that are 50% or more owned by such MNEs. The rules should also cover foreign entities with a permanent establishment (PE) in Egypt. Clear exemptions should be granted for government entities, non-profits, pension funds, recognized investment vehicles, and strategic public-interest logistics operations.

Step 4: Build Strong Compliance Infrastructure

Compliance rules should be straightforward. In-scope entities should be required to register within 6 to 9 months of the law’s enactment. Tax returns and top-up payments should be submitted within 6 to 15 months of the fiscal year-end. Proportional penalties for non-compliance, such as fines up to twice the unpaid tax, should be enforced to incentivize timely and accurate reporting.

Step 5: Strengthen Transfer Pricing and Related-Party Oversight

To maintain consistency with Pillar Two, Egypt should reinforce its transfer pricing framework. This includes embedding the arm’s length principle into domestic law, mandating the preparation of local and master files, and requiring annual disclosure of all related-party transactions. The ETA should be empowered with modern risk assessment tools and access to OECD-reviewed documentation standards.

Step 6: Enable Dispute Resolution and Safeguards

The legal framework should offer robust dispute resolution mechanisms. This includes the establishment of national-level tax grievance committees, access to Mutual Agreement Procedures (MAP) under existing tax treaties, and transparent appeal processes that include confidentiality and resolution timelines.

Step 7: Engage and Prepare Stakeholders

Effective implementation requires collaboration between government, industry, and professional advisors. Training programs for ETA staff on BEPS principles and international accounting standards (such as IFRS) should be rolled out. Businesses and tax professionals should be engaged in early compliance pilots, and targeted awareness campaigns should be launched to ensure full ecosystem readiness.

Step 8: Secure Egypt’s Tax Revenue

Without a domestic QDMTT, Egypt risks losing taxing rights to jurisdictions where MNEs are headquartered or managed. Enacting a robust QDMTT ensures Egypt has the first right to tax low-taxed profits generated within its borders. This not only secures national revenue but also strengthens the country’s fiscal sovereignty and fairness in taxing multinationals.

Step 9: Connect QDMTT to Egypt’s Broader Tax Reform Strategy

The QDMTT should not stand in isolation. It must be part of a broader tax modernization agenda that includes reviewing corporate tax rates, updating Controlled Foreign Company (CFC) rules, expanding withholding tax measures, digitizing tax reporting, and strengthening audit and appeals frameworks. Doing so ensures alignment with global best practices and supports a future-ready Egyptian tax system.

Conclusion: Now Is the Time to Act

Egypt is at a pivotal crossroads. Without timely legislative and administrative action, the country risks falling behind in the global tax reform movement. By enacting QDMTT and issuing clear, enforceable executive regulations, Egypt can not only safeguard its own taxing rights but also enhance its attractiveness to compliant global investors and position itself as a regional tax reform leader.

Written by: Hamdy Yehia, Tax Partner