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Wednesday, 25 July 2018

Major amendments to the tax code coming during next legislative term

EXCLUSIVE- Major amendments to the tax code coming during next legislative term: The Finance Ministry plans to introduce a package of new legislation when the House of Representatives reconvenes from its summer recess, Finance Minister Mohamed Maait told Enterprise. Topping the list of laws are amendments to the tax code which are meant to facilitate and streamline tax procedures and cut red tape, Maait added. While Maait did not delve into specifics, he did tell us that the law would reduce the amount of documentation required for taxation. Other clauses would impact sales and real estate taxes, he added without providing details. Another ministry source tells us that the amendments have already been drafted and are ready.

Are tax incentives for SMEs in the works after all? The Finance Ministry is looking to raise the turnover limit to be exempt from the VAT, sources said. As it stands, businesses with a turnover of less than EGP 500k a year are exempt from VAT. The ministry is considering raising that ceiling to EGP 1 mn in order to accommodate SMEs making less than that amount, sources added, without revealing when the ministry is planning to issue the law. The move comes as part of a series of incentives the government hopes to extend to SMEs. While a senior government source had told us that the SMEs Act — the key legislation looking to incentivize SMEs to join the formal economy — will not contain tax incentives, amendments to the VAT Act the ministry is considering appear to be an attempt to lighten the tax load on SMEs who have registered. Sources noted that SMEs making under EGP 1 mn must still pay income taxes. Under the SMEs Act, the government will be guided by the CBE’s definition of SMEs, which counts “micro-enterprises” as businesses making less than EGP 1 mn.

Other items on the ministry’s legislative agenda it hopes to see passed in the upcoming cycle include a new and improved Customs Act, the source told us. While the House of Representatives had already signed off on a series of amendments to the already existing act, the ministry is planning to introduce a new and more comprehensive law, according to Maait. Sources had told us previously that the new legislation also includes a host of measures that would facilitate the flow of goods through Egypt’s ports, including establishing a “white list” of importers who will benefit from expedited clearance of goods.

Other laws due to be passed in the next legislative term also include a new Public Finances Act — which will impact how the budget is drafted — and a new Pensions Act, Maait told us. The ministry is also looking to complete the executive regulations on a number of laws which have recently been passed in the House, including the Public Procurement Act (formerly the Auctions and Tenders Act).

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