The Finance Ministry is expecting to receive the state council (Magles Al Dowla)’s review of  the value-added tax (VAT) law soon, deputy finance minister Amr El Monayer said, according to Al Masry Al Youm. The Finance Ministry will then send the proposed law to the House of Representatives. He noted that the proposal will include a unified (and as-yet unspecified) rate. Exceptions will be tools and machinery (taxed at 5%) and vehicles, which will have a “different rate.” El Monayer added that “basic services and commodities” will be tax exempt.

…Goods already taxed at higher rates will not be affected: Implementation of the VAT will not increase tax rates on cars, cigarettes, alcohol or telecommunications services, Tax Authority chief Abdel Moniem Matar told Al Mal. Matar explained that those goods and services are already taxed at a higher rate than the expected VAT rate of 14%, and hence the introduction of the new tax policy will not affect them. He also noted that fertilizers will retain its preferential tax treatment and is expected to still be taxed at 5%.  

The inflationary impact of the VAT should be in the range of 0.8-1.3%, said Assistant Finance Minister Yasser Sobhy. Recent exemptions of goods and services, particularly food, have lowered the government’s estimates of the tax’s impact from a previous range of 1.5-2.5%, as 45% of individual spending goes towards food, Sobhy said yesterday.