No change in price of cars and fuels under VAT: The Finance Ministry denied yesterday that additional taxes on cars will be imposed as part of the value-added tax (VAT) regime, adding in an emailed statement yesterday that the sales tax already in place will be the sole tax on cars. Furthermore, implementation of the VAT will have no impact on petrol or diesel prices at the pump, a spokesman for the Oil Ministry said, adding that the current selling prices are net of tax, Al Mal reported. The statements put to rest speculation we noted yesterday that vehicles and fuels would be subject to new taxes under the VAT.

Youm7 leaks what it claims is the draft VAT legislation: The newspaper has posted a draft of what it claims is the draft bill presented yesterday to the House by Finance Minister Amr El Garhy. The list of exemptions (beginning page 69) appears only to exempt crude oil, natural gas, and butane (the only refined fuel product mentioned in the exemptions list). This list correlates for the most part the 52 goods and services we had previously noted which includes basic and consumer foods (no mention of cooking oils), financial services, healthcare, broadcasting and publishing.

In any event, El Garhy is expected to clarify the state of the VAT in a press conference today.

What about telecoms? A VAT of 8% on mobile phone networks was being suggested by both Al Mal and Al Borsa (which published an extended list of possible VAT rates). The House of Representatives has apparently called on representatives from the sector to discuss the issue. Sources from the telecommunications industry told Al Mal that they were uncertain whether an 8% VAT on their services would be on top of a 15% sales tax unique to the industry or replace it. The exemptions lists does include landline phone calls and ADSL internet.

As for the discussions in the House of Representatives themselves, committee members attacked the new additions to the tax including those for the fertilizer industry, professional services and tuition for international schools, with member Talaat Khalil telling Al Borsa that the committee plans on amending the exemptions list and the list of recommended taxes on goods under the VAT. Khalil called for civil society groups and senior economists to be invited to attend these sessions.

Meanwhile, the House Planning Committee plans to invite investors and the business community representing a multitude of sectors including the automotive, fertilizers, food, and tobacco sectors to participate in the VAT hearings. Committee member Sylvia Nabil tells Al Mal that these sessions will begin on Thursday and will be joined by representatives of the Tax Authority and the Finance Ministry.