- Published on 19 June 2026
The Built Environment Observatory welcomes the approval by the House of Representatives’ Planning and Budget Committee of the draft law titled “Transferring a Percentage of State-Owned Companies’ Net Profits to the Public Treasury,” submitted by the government. The draft law stipulates that the boards of companies in which 50% to 100% of the capital is owned by the state or public legal entities must set aside 5% of net profits. This percentage is considered public revenue that is transferred to the Treasury within a period not exceeding four months from the close of the fiscal year, with the aim of supporting state resources and enhancing the efficiency of managing financial surpluses in public companies.
This step is considered pivotal in boosting the Treasury’s (Ministry of Finance) revenue collection of its profit shares from more than 700 state-owned companies, which are aware of the extent to which they have been deprived of these funds. The Ministry of Finance has made efforts to improve the collection of these funds in recent months by restructuring boards of directors, eliminating tax exemptions, and enhancing transparency regarding these companies.
A previous study by the Observatory titled “Where do State-owned Real Estate Profits Go?” examined a case study of the largest state-owned real estate companies, led by the Holding Company for Construction and Development, found that only 7.4% of their total profits were transferred to the treasury between the fiscal years 2017/2018 and 2020/2021. The remaining profits, however, were set aside as reserves and retained earnings through a process of “dilution” via a sequential accounting system that results in the retention and reinvestment of higher-than-required percentages, rather than transferring larger portions to the Treasury. This has deprived the Treasury—and, with it, the state’s social spending—of a larger share of the real estate activities of five well-known companies in which the Holding Company for Construction holds full or partial stakes: Maadi for Development and Construction, Al-Nasr Housing and Construction, Heliopolis Housing and Construction, Al-Shams Housing and Construction, and Madinat Masr
State-owned enterprises have a clear mandate to invest in profitable ventures, many of which are non-strategic and non-social in nature, such as real estate development. While these entities are supposed to transfer their profits to the state treasury to be spent on the social needs of the population, withholding the lion’s share of these profits and depriving the treasury of them has resulted in these public companies having a negative impact on residents. In the real estate sector, for example, most of the development is geared toward the upper-middle and luxury housing, leading to a severe commodification of housing and eroding affordability for middle- and low-income households. As the government expands its involvement in the real estate sector, regulating the relationship between the public treasury and state-owned real estate companies and agencies could help rectify this situation and generate social benefits for the population by ensuring the state collects its share of profits from this non-strategic activity and allocates those funds to social needs such as social housing, education, and healthcare.
The law mandating the transfer of a percentage of state-owned companies’ profits to the public treasury is part of a recommendation from the Built Environment Observatory’s study to impose a one-time tax on state-owned enterprises (SOEs) if it is proven that they have retained earnings or accumulated reserves beyond those stipulated by law. The study concluded that this step is of paramount importance in light of the State Ownership Policy Document and the risk of these profits being privatized before they are transferred to the Treasury. The study also recommended increasing transparency and public oversight by subjecting all state-owned enterprises to transparency and public disclosure standards similar to those of publicly listed companies, whereby their activities and financial reports are disclosed on a quarterly or annual basis via a digital portal accessible to the public. This is in addition to restructuring economic agencies—particularly the New Urban Communities Authority—which has multiple activities and roles, in order to separate its non-strategic activities, such as real estate development, from its strategic activity, which is the development of new urban communities.