Recognizing that taxation has a significant bearing on investment behavior, this paper attempts to estimate the full impact of capital income taxation on investment decisions in Egypt. Although similar studies have been conducted in the past, this paper attempts to offer a more accurate assessment by measuring the Marginal Effective Tax Rate (METR). Based on METR estimates, the study shows that the marginal effective tax rate in Egypt is relatively higher than the corresponding rates in other developing countries. It also shows that the system favors joint stock companies listed in the stock exchange over other legal forms, manufacturing over services, debt over equity financing, and land over other capital assets. Export activities face lower METR compared to inward oriented ones, but not enough to offset other biases against exports. The study concludes by making broad recommendations consistent with investment promotion, efficient allocation of resources, and fairness. These recommendations include reducing the real tax burden on investment, phasing out the biases induced by the tax regime, and reforming tax administration.