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Monday, 4 June 2018

Taxman looking to collect VAT on e-commerce, online ad sales

EXCLUSIVE- The taxman is looking at imposing VAT on online ad buys and e- commerce transactions, sources in government tell Enterprise. The Tax Authority is actively studying the impact of making the online sale of goods and services subject to 14% value-added tax. In parallel, it is looking at ways of charging VAT on online ad sales by both domestic players and global giants such as Google and Facebook. There’s no word on how the tax could be collected from other sellers of programmatic ads.

Background: The potential tax grab is set in the context of a still-under-discussion overhaul of the nation’s tax system that could be implemented as early as FY2019-20. We’re told the authority plans to speak with players in the industry to discuss the best mechanism to impose VAT on both ad buys and e-commerce sales. Still unclear is whether the government plans to subject online ad sales to both VAT and the stamp tax on advertising, a form of double taxation that would be highly corrosive for the nation’s struggling digital publishers as well as legacy outlets struggling with the transition to digital.

Faster resolution of tax disputes are also a priority for policymakers, with sources in government telling us to expect amendments to the Tax Act that would cut penalties on overdue tax payments. The Tax Authority currently has 160k outstanding tax disputes and could net a windfall of as much as EGP 41 bn if they were resolved. The government hopes to bring in EGP 6-7 bn from settling tax disputes this fiscal year, Tax Authority chief Emad Samy told us.

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