House Budget Committee to set VAT rate today, most likely to reject 14%: The House Planning and Budget Committee looks likely to recommend a baseline rate for the value-added tax (VAT) below the 14% rate recommended by the Ismail government when it votes on the matter later today. Al Borsa notes that the majority of committee members voted for a 12% VAT in a straw poll last week; rates of 12.5% and 13% tied for second place, the committee’s deputy chair, Yasser Omar, said. Omar confidently tells Al Shorouk that the rate of 14% will be rejected, and a rate between 12% and 13% will be the likely choice. The committee will also recommend that 55 goods and services be declared VAT-exempt (up from 52 at the start of last week), while reducing taxes on others items including cooking oil, according to Omar. Meanwhile, the deputy chair of the House Economics Committee is reportedly lobbying for an 11% VAT rate.

Some banking and non-bank financial services may be subject to VAT, it seems, as the Ismail government wants to make as many as 24 additional categories of goods and services subject to VAT, Al Masry Al Youm, which claims to have a obtained leaked version of the updated list of items. Banking and financial services had been on the exemptions list, but some services could now be subject to VAT, as could legal and other professional services, newspapers, security services, restaurants outside the tourism sector, and “internet and computer services” (ADSL internet services had been VAT exempt). A full and detailed list of items subject to the VAT will be published when the legislation is voted on, said Deputy Finance Minister Amr El Monayer.

The Planning and Budget Committee is expected to meet with Finance Minister Amr El Garhy today where it will receive a detailed report on projected revenues from the VAT, which the House Budget Committee’s Omar says will ring in at c. EGP 24 bn in the current fiscal year, below the EGP 32 bn projected by the government. The meeting comes after El Garhy warned of dire consequences if the VAT vote was delayed. As we noted last week, a Finance Ministry source had put the voting date on the VAT at 28 August.