Imported production inputs will be taxed at 1.5% under the draft value-added tax (VAT) legislation due to hit the House of Representatives “within days,” according to Al Mal, which has a long rundown on what it claims is the final draft of the package. Exports will not be taxed as long as the value of goods and services exported is not less the cost of goods and services that went into its production. The draft also confirms a lottery will be put in place to try to clamp down on tax evasion, with the prize pool being 1% of tax revenues collected from the VAT. The draft also appears to corroborate policy amendments and exemptions we previously noted. Consumer staples ranging from infant formula to food commodities will be tax exempt, as will be healthcare, education, banking and financial services, publishing and printing. There’s no word on whether international schools are VAT-exempt, e-commerce transactions are subject to VAT, and you’ll have to hang-on to your VAT records for a period of five years.

(Wondering what a VAT lottery would be all about? As the International Tax Review (paywall) puts it: “Citizens use sales receipts from outlets such as cafes, coffee shops, hairdressers and mechanics to enter the draw,” where prizes can be cash or physical goods. Why? The idea is that the merchant is more likely to give you a legal tax receipt this way — and the government gets pools of data to cross-check in audits. This is what the announcement of winners looks like in Malta (pdf), where the lottery is a big enough deal that it’s a fixture of the local media scene. Taiwan was the first introduce a VAT lottery in the 1950s, Malta was the first in the European Union to do it in 1997. Slovakia introduced its “compliance lottery” in 2013 and Portugal in 2014. Really geeking-out on the subject? The European Commission has published a white paper on the topic: “Improving VAT compliance – random awards for tax compliance” in pdf.)

Meanwhile, Finance Minister Amr El Garhy confirmed in a statement that the State Council (Majlis Al Dowla) reviewed the amendments (recommending minor changes) and the cabinet will introduce them to the House of Representatives in the coming days. We had reported on Sunday that Deputy Finance Minister Amr Al Monayer expects the House wouldn’t discuss it until after the Eid Al Fitr break. El Garhy added that the ministry will be drawing up special tax code for SMEs, which would encourage them to participate in the formal tax system.