Implementing the value-added tax (VAT) is “credit positive” for Egypt, Moody’s says. VAT “forms an integral part of the government’s reform program over the coming three years and together with reforms to tax administration, will gradually increase Egypt’s low tax receipts and support its fiscal consolidation efforts.” Moody’s added that the VAT will likely “exacerbate an already high inflation,” but believes “VAT is an important step to increase Egypt’s tax revenues.” The additional revenues will come from the 3ppt differential between the VAT rate of 13% (in year one, rising to 14% in year two) and the current 10% GST as well as from “wider participation from Egypt’s large non-tax-paying informal sector and stiffened penalties against tax evasion.”