RIYADH: Egypt plans to issue the first tax sukuk in its history during the current fiscal year, offering returns that are fully exempt from taxes. The value of the sukuk and the return due on it will later be used to settle taxes owed by the taxpayer, according to two government officials who spoke to Asharq Bloomberg.
A government official, who asked not to be named, said the first issuance will target all taxpayers, including individuals and public- and private-sector companies. These may include major state-owned authorities and corporations.
A statement issued by the Egyptian presidency on Aug. 10 revealed that Egypt intends to issue tax sukuk for the first time. The instruments will be funded by taxpayers, with both their principal value and accrued returns to be used to settle the taxes they owe.
Egypt’s fiscal year begins on July 1 and ends on June 30 of the following year.
A second government official, who also requested anonymity, told Asharq Bloomberg that the tax sukuk will have a one-year maturity and will be offered for subscription by the Central Bank of Egypt on behalf of the Ministry of Finance.
Another source at the Ministry of Finance told Asharq Bloomberg that the ministry will issue, within three weeks, the rules and procedures governing the first tax sukuk issuance.
How do tax sukuk work?
Egypt’s Income Tax Law gives the finance minister the authority to issue tax sukuk that taxpayers may subscribe to, offering a tax-exempt return determined by the minister. The value of the sukuk and the return due on it are then used to settle the taxpayer’s tax liabilities, in accordance with Article 115 of Income Tax Law No. 91 of 2005.
For example, if a taxpayer subscribes to a sukuk worth $1.99 million with a hypothetical return of 20 percent, the taxpayer would be entitled to 2.38 million at the end of the sukuk’s term. That amount could then be used to pay taxes owed. The 20 percent return in this example is purely hypothetical and is intended only to illustrate how the instrument works.
According to the presidency’s statement, the government aims to use the sukuk to reduce its financing needs and, consequently, lower its debt-servicing costs.
Egypt is facing mounting pressure from the rising cost of servicing its debt. Interest payments accounted for about 71 percent of total public revenue during the first 11 months of the 2025/26 fiscal year, which ended in June.
According to data from Egypt’s Ministry of Finance, interest payments rose 20 percent year over year from July through May 2026, reaching about $42.11 billion.
