FinMin takes next step in taxing e-commerce, social media ad buys
EXCLUSIVE- FinMin takes next step in taxing online ad buys and e-commerce transactions: A Finance Ministry committee is looking into setting up a tax formula for ads on social media and e-commerce transactions, ministry sources tell Enterprise. The committee looking at Organisation for Economic Co-operation and Development (OECD) best practices for how to structure the tax, the sources added, and will hold its first meeting with the OECD this week. The move implies that the ministry is looking for a wider taxation framework for social media ads and e-commerce beyond the instituting a VAT on them, as sources had previously told us. This comes the House of Representatives is already looking at a draft law to tax ads on social media, which was introduced by MPs last December.
Uber and Careem told to hurry up and pay VAT: The ministry has also appears to have set a deadline for Uber and Careem to present the ministry their financials and tax returns to file for past-due VAT on their services. The sources even implied that the deadline had passed and that the ministry was extending the deadline for another week. Uber officials reportedly promised late last month to deliver the documents once they coordinate with their parent company, while Careem officials we to have sat with tax officials last month to hand over the paperwork, we’re told. The ridesharing companies are required to retroactively pay VAT of 13% on their own share of revenues from September 2016-June 2017 and 14% VAT on everything from July 2017 onwards.
The Uber experience is one factor in the Finance Ministry’s move to review dual taxation treaties with 13 countries: The Finance Ministry wants to take a closer look at companies that operate in Egypt, but don’t pay taxes here under tax treaties. The ministry is said to want expanded power to investigate whether the companies have actually been paying their taxes abroad in accordance with the agreements. Sources close to the ministry pointed out that Uber operates as a foreign company in Egypt subject to foreign taxes, while Careem has incorporated a local company.
FinMin’s new billing monitoring system gets shot in the arm from Japan: Egypt signed yesterday a EGP 15.5 mn grant agreement with Japan’s BMC International to finance the establishment of an automated VAT collection system in Egypt, according to an Investment and International Cooperation Ministry statement (pdf). The system is part of wider plan by the Finance Minister to better monitor billings to get more accurate data for taxation.