WHAT’S THE DIFFERENCE between the value-added tax (VAT) and the old sales tax system? Beyond scope and rates, not that much as the mechanisms for applying them are almost the same, argues tax advisor Abdelhamid Attalla in a piece for Sharkawy & Sarhan’s newsletter. The most substantial change is the inclusion of services into the system, which is sure to raise prices and put a dent in margins, said Atalla. Producers and merchants, who were only able to deduct taxes paid on the goods they used, can now deduct the taxes paid on services they procured as well. Reverse charges will also be applied to imports of services, so importers of services must now pay VAT. The expanded scope of the tax also means that we should expect prices to go up overall with the increased baseline rate. Atalla notes, as we did in a “PSA” last week, that the law went into force on 8 September, so any invoice issued or contract entered into as of that date has to reflect the VAT.