• Egypt and UNECA launched a five-day workshop in Cairo to strengthen maritime tax audits and IFRS-based compliance.

• The move follows a sharp 2024 Suez Canal revenue drop and targets a two-point rise in tax-to-GDP under Egypt’s IMF plan.

• Training covers IFRS audits, VAT issues, cross-border cases, and consistent enforcement across tax offices.

Egypt launched a comprehensive training program with the United Nations Economic Commission for Africa to strengthen tax collection in its maritime sector, as the country grapples with a sharp decline in Suez Canal revenues and mounting fiscal pressures.

The five-day workshop, which began Sunday in Cairo, brings together senior tax officials, supervisors and auditors from Alexandria, Hurghada and the capital to enhance audit efficiency and ensure accurate tax assessments in the shipping industry.

The initiative comes as Egypt works to meet International Monetary Fund commitments to raise its tax-to-revenue ratio by 2 percentage points of gross domestic product over the next two years. 

"Egypt's efforts to modernize its tax system contribute to sustainable development, fiscal stability, promoting investment, and aligning with international standards," said Adam Elhiraika, Director of the UN Economic Commission for Africa's North Africa Office, in a statement. The program aims to improve the application of international financial reporting standards in tax audits and enhance the management of cross-border tax issues.

Revenue Pressures Mount

The training comes at a critical time for Egypt's public finances. Suez Canal revenues plummeted to $4 billion in 2024, down 60.7% from $10.2 billion the previous year, according to the Suez Canal Authority. The dramatic decline resulted from Red Sea tensions and Houthi attacks that disrupted global shipping routes, forcing vessels to take longer routes around Africa.

The canal, which typically handles about 12% of global trade, represents a crucial revenue source for Egypt's economy. The country's gross domestic product reached $393 billion in 2023, while its current tax-to-GDP ratio remains at approximately 14.1% as of 2022, well below the World Bank's 15% minimum threshold for fiscal viability.

Under its latest agreement with the IMF reached in December 2024, Egypt committed to accelerating fiscal reforms and improving revenue collection. The Washington-based lender approved $1.2 billion in additional funding contingent on Cairo implementing comprehensive economic reforms, including the maritime tax training initiative.

Modernization Drive

The workshop focuses on developing participants' capabilities in applying International Financial Reporting Standards (IFRS) in tax audits, identifying and addressing VAT-related audit issues, and managing cross-border tax matters more effectively. Officials will also receive training on promoting consistent and transparent application of tax laws within the maritime sector.

Egypt's maritime industry represents a significant component of the country's economy, with major ports in Alexandria, Port Said, and Suez handling substantial cargo volumes. The sector's strategic importance has grown as Egypt seeks to diversify revenue sources beyond traditional tourism and Suez Canal transit fees.

The UN Economic Commission for Africa's North Africa Office, based in Rabat, Morocco, has been working closely with regional governments to strengthen fiscal institutions and improve tax administration. The collaboration with Egypt's Tax Authority represents part of broader efforts to enhance revenue mobilization across North African economies.

Fiscal Targets

Egypt's commitment to raise its tax-to-revenue ratio by 2% of GDP over two years reflects the government's recognition that improved domestic revenue mobilization is essential for fiscal sustainability. The country has been implementing various economic reforms under IMF guidance, including currency devaluation and state-owned enterprise divestment.

The maritime tax training program aligns with Egypt's broader strategy to modernize its tax administration and align its collection practices with international standards. Officials expect the enhanced capabilities developed through the workshop to contribute to more effective tax compliance in the shipping sector and support the country's fiscal consolidation efforts. 

The initiative underscores Egypt's commitment to strengthening institutional capacity while addressing immediate revenue challenges posed by external economic shocks and regional security concerns affecting the Suez Canal's operations.

Idriss Linge