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Monday, 25 July 2016

Garhy meets with FEI today over VAT amid mounting criticisms and questions over tourism inclusion

Mounting criticism of the value-added tax: The Tax Authority is unprepared to enforce the value-added tax (VAT), said Yasser Maharem, secretary general of the Egyptian Taxation Society. 600K new companies or sole proprietorships are expected to register to collect the tax, which will prove challenging for an authority already straining to collect from the existing pool of taxpayers, Maharem said, according to Al Borsa reports. Maharem also criticized the exemption of the film and media industry from the VAT, saying as they are “not crucial” to the average Egyptian. He also suspects the Finance Ministry is downplaying the inflationary impact of the measure. Meanwhile, the good folks at the Importers Division of the Cairo Chamber of Commerce are predicting an inflationary spike of 20% across the board, according to Al Shorouk.

FEI to meet Garhy today; supports VAT, but wants concessions: Finance Minister Amr El Garhy is expected to meet with Federation of Egyptian Industries’ head Mohamed El Sewedy and the head of its taxation committee, Mohamed El Bahay, to discuss industry’s criticism of the VAT, Al Ahram reports. El Sewedy and El Bahay both said that they support the VAT in principle, but will lobby El Garhy to a measure that would exempt companies or sole proprietorships with revenues of less than EGP 500k from collecting the tax. They will also request that the baseline tax rate will be reduced from 14% to 10%

Fate of Tourism and the VAT: Meanwhile, the head of the Egyptian Businessmen Association’s tourism committee, Ahmed Balba, urged El Garhy to exempt the entire tourism sector from the VAT. the committee apparently sent a notice to El Garhy calling for the legislation to be amended accordingly, Balba’ tells Al Mal. While tourism is not mentioned specifically as VAT-exempt, exports are being exempted. By virtue of bringing in FX to the country, tourism could be classified as an export industry. However, Balba’s argument appears to only be the state of the tourism sector at the moment.

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