Does the tax facilitation package contribute to lowering the exchange rate of the dollar to the Egyptian pound

Egypt is witnessing strenuous efforts to achieve economic stability, and among the tools used by the government are tax facilitation packages, where it has issued 3 laws during the recent period, Law 7, 6, 5 of 2025, in order to settle the situation of some financiers, incentives and tax facilities for projects whose business volume does not exceed 20 million pounds and amending some provisions of the Tax Procedures Law.

An important question arises about the extent to which these facilities and incentives affect the exchange rate of the dollar against the Egyptian pound.

First, you should get acquainted with the tax facilities and their goals:

* The tax incentives are aimed at stimulating domestic and foreign investment, encouraging companies to expand and increase production.

* Increased investments are expected to increase the supply of goods and services, thereby reducing the need for imports, which will reduce the demand for dollars.

* These facilities are also aimed at broadening the base of the tax community, increasing revenues in the general budget, and strengthening trust between the government and investors.

Secondly, the possible impact on the exchange rate.

In theory, tax incentives can contribute to improving the exchange rate of the Egyptian pound, by increasing hard currency inflows to the country as a result of increased foreign investments, also increasing exports, reducing imports and increasing production leads to an increase in the supply of local currency and reducing the demand for foreign currency.

Therefore, the stability of the tax system to become more just and stimulating contributes to increasing investment rates and then increasing employment, production and export rates, and then a higher growth rate, achieving development, more stability in the exchange rate and the creation of new and sustainable dollar resources that reduce indebtedness.

However, the effect of tax facilities and facilities on the exchange rate depends on several other factors, such as:

Is the global economic situation slowing down or growing Global interest rates.

Capital flows.

Reducing bureaucracy and overcoming obstacles for investors

Therefore, it should be borne in mind that the currency exchange rate is influenced by multiple factors, and tax incentives are not the only factor affectingthe improvement of the pound's exchange rate against foreign currencies.

Link to the article on the Egyptian decision newspaper