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Sunday, 28 August 2016

International schools are VAT-exempt, Finance Ministry issues brief on VAT, House divided on law

International schools, pharma products (both locally manufactured and imported), recycling, and handicap-enabled vehicles will all be exempt from the value-added tax (VAT), Deputy Finance Minister Amr El Monayer tells Al Mal. In a separate panel discussion hosted by Al Shorouk on the VAT, El Monayer said 57 goods and services will be VAT-exempt, while state-owned Al Ahram quotes the Finance Ministry as saying that the list holds 56 items. El Monayer confirmed that the legislation will increase taxes on cigarettes and alcohol.

Healthcare services could be VAT-exempt, with exception of private practitioners’ fees: Deputy chair of the Planning and Budget Committee Yasser Omar says the committee recommended exemptions for all healthcare services with the exception of private practices, saying it would be unfair to exclude doctors from the VAT. He added that the committee also recommended 32-inch televisions and refrigerators under 16 feet will be exempt from the VAT. El Monayer noted that the full list of exemptions will only be published after the legislation is approved by Parliament.

Al Ahram published a detailed brief on VAT after midnight including taxation of imports under the VAT, accounting procedures under the law, and how the tax would be applied on commissions and installment payments. We’re digesting it and will have more tomorrow. The brief and El Monayer’s press statements come as part of a media blitz by the Finance Ministry over the weekend revealing some of the essential elements of the Law in the run up to the House of Representatives opening debate today on the bill that will create the tax. The House’s debate will run for at least three separate sessions according to El Monayer.

The House looks likely to debate the VAT rate, not the necessity of the law: The dominant Support of Egypt coalition has announced it approves the law in principle, while the Free Egyptians Party, Al Wafd Party, the Egyptian Democratic Party, and the Nation’s Protectors Party have all said that they disapprove of the 14% baseline rate being pushed by the Ismail government. Some parties are pushing for a rate as low as 11%, AMAY reports.

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