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Monday, 4 June 2018

House general assembly starts budget debate, gives gov’t one-month deadline for strategy to bring small businesses into formal economy

BUDGET WATCH- The House of Representatives’ general assembly is set to continue debating the FY2018-19 state budget today. Discussions kicked off yesterday after the Budget Committee completed its review of the bill, Ahram Gate reports. With the Finance Ministry’s approval, the committee allocated additional amounts to a number of budget items, including EGP 2 bn for the Education Ministry to purchase tablet devices needed for the implementation of its new system at the start of the academic year, as well as EGP 1 bn split evenly between health and education, committee chair Hussein Issa tells Al Mal. The Health Ministry is also receiving an extra EGP 2.6 bn to add its investment budget. You can tap or click here to read our refresher on the new state budget.

The House has given the government a one-month deadline to present a strategy for incorporating small businesses into the formal economy, Al Mal reports. President El Sisi had said last month that all businesses that choose to go legit will be exempt from paying taxes for five years, and will enjoy other incentives including simplified access to social insurance. The Finance Ministry is also reportedly mulling setting a flat tax for SMEs based on the size of their top line as part of the SME Act, Tax Authority sources had previously told us.

House wants to implement “progressive income tax system.” The catch is, we already have one: According to a muddled and confused story in state news agency MENA, the Budget Committee has recommended in its final report that the Ismail government introduce legislation to bring into effect a progressive income tax system as mandated by Article 38 of the constitution. A progressive tax system, MENA says the committee argues, would allow the state to widen its tax base. Fair ‘nuff, but we already have a progressive tax system for individuals, running from 0% to 22.5% at the top end. It’s unclear whether the story is meant to signal potential changes to tax brackets (see our lead story in Speed Round this morning, above), a progressive tax system for corporations, or something else entirely.

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