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Tuesday, 18 September 2018

A new comprehensive tax code to come into effect soon -FinMin

**#1 LEGISLATION WATCH- New, comprehensive tax code to come into effect soon? The Finance Ministry has finished drafting a new comprehensive tax code, Minister Mohamed Maait announced in a statement yesterday (pdf), and it looks to be on the fast track to to the House of Representatives. The bill was sent to President Abdel Fattah El Sisi last Thursday and is expected to entail a complete restructuring of the Tax Authority’s inner workings in an effort to streamline tax procedures, according to Maait, who had first told us in July to expect substantial changes to the tax code to be presented to the House of Representatives when it reconvenes next month.

Details still scarce: Apart from the fact that the bill will regulate electronic tax payments, details are still scarce. Maait had previously told Enterprise the law would reduce bureaucratic red tape and include provisions that would impact sales and real estate taxes. He had also said that the new policies means to curb tax evasion and corruption through improved transparency and accountability.

The ministry has also completed a draft bill on taxation of very small enterprises, which aims to further the goals of financial inclusion, Maait said. No further details were provided. Sources told us last week that the ministry was conducting a final review of the SMEs Act, which aims to encourage very small businesses to join the formal economy, was due before the Madbouly Cabinet soon.

These changes are all aimed at widening the government’s tax base and increasing revenues. Tax revenues should rise to 14.6% of GDP in FY2018-19, up from 14% currently, according to the minister, who had previously said that a more streamlined tax system is a way of boosting inflows into state coffers. To that end, efforts are ongoing to overhaul the real estate tax system, which saw agreements signed recently with the ministries of oil and tourism on the calculation of real estate taxes for their respective sectors. Resolving outstanding tax disputes through an incentive-based system also serve that purpose. We had also heard that the ministry was studying how to tax social media advertisements and e-commerce transactions.

This came as a committee from the ministries of investment and finance issued guidelines yesterday meant to simplify the processing of tax registration forms, according to an official statement. Under the new guidelines, investors will receive their tax registration number as soon as they submit their application, which allows them to complete other procedures and paperwork until the final certificate is issued. Registration for the value-added tax will also be expedited in a similar fashion.

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