MNOs and the government have so far failed to reach agreement on how mobile recharge cards should be subject to the value-added tax. The Finance Ministry, mobile network operators and the National Telecommunications Regulatory Authority (NTRA) have been locked in on how the VAT will be reflected in the pricing of recharge cards for mobile phones. Yesterday’s meeting failed to reach an agreement on the total VAT rate on the cards, how much the prices of the cards will increase as a result of the VAT, and the methods the MNOs will use to implement the price hikes, AMAY reports. As the cards are subject to a 13% VAT as well as an 8% fixed tax applied on “non-essential goods,” the price increase should not exceed 6%, or the difference between the old 15% sales tax and the 21% VAT framework, the Tax Authority chief Abdel Moneim Mattar said. Discounts on production inputs in the VAT could also see that tax fall to 18%, said Deputy Finance Minister Amr El Monayer.

Sticking points between the government and MNOs appear to be the operators’ insistence on making the end user absorb the full cost of implementing the VAT, while the NTRA wants the MNOs to carry at least part of the burden. Operators and the government also discussed how to prevent price gouging by retailers..