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Tuesday, 3 April 2018

Cabinet economic group discusses SME Act

LEGISLATION WATCH- Cabinet economic group discusses SME Act: The Ismail Cabinet’s economic group met yesterday to discuss a draft law on small and medium-sized businesses that would encourage SMEs to join the formal economy, according to a statement from the Cabinet. The statement offered little by way of detail beyond reiterating previous statements on how the law would offer tax and non-tax incentives and empower the SME Development Authority to set policy for the sector.

What to watch for, part 1: Smart tax incentives are in the works. Previous statements from officials implied that SMEs of a certain size (presumably very small companies) would be granted full or partial tax exemptions under certain conditions. The level of incentives provided in the framework would be pegged to how far the business has come towards registration and entering the tax system, former Vice Minister of Finance Amr El Monayer had suggested. The Finance Ministry is also planning to simplify the paperwork SMEs need to file to become part of the tax system, he said at the time.

What to watch for, part 2: Non-tax incentives. SMEs could also be in line for subsidized interest rates for a longer period of time, SME Development Authority Chairperson Niveen Gamea had said without explaining how that would work in practice, when interest rates are set by banks regulated by the CBE. Other non-tax incentives we’ve heard include allowing for the use of real estate assets as collateral for funding, in addition to facilitating licensing procedures.

Economic group signs off on OC / Engie / Toyota Tsushu Gulf of Suez wind farm: Also from the meeting, the economic group approved contracts that would see a consortium of Orascom Construction, Engie, and Toyota Tsusho Corporation develop wind farms in the Gulf of Suez. The Egyptian Electricity Transmission Company (EETC) signed contracts last month for the 250 MW Gulf of Suez wind farm. However, the Cabinet’s statement puts the projects capacity at 500 MW.

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