EXCLUSIVE- VAT minimum registration requirements to be amended as an incentive to SMEs: The government is set to amend the minimum revenue required to register for VAT to spare SMEs from the burden of paying a VAT, a government official told Enterprise yesterday. The government plans to raise the minimum revenue requirement to EGP 1 mn, from a EGP 500,000 in the current version of the VAT Act. The move, which is part of a series of incentives for SMEs to join the formal economy, will require both an amendment to the VAT Act and will be enshrined in the upcoming SMEs Act, the source added. The Finance Ministry has concluded drafting the act and will review it before putting it up for a national dialogue ahead of introducing it to the House of Representatives. The source did not reveal the timeline for pushing through the SMEs Act or when the ministry plans to introduce the amendments to the VAT Act.

So how are SMEs to be taxed under this final draft of the act? SMEs whose topline is EGP 250,000 or less, will pay a flat tax of EGP 2,000. Those earning between EGP 251,000 and EGP 500,000 in revenues will pay an income tax of EGP 5,000. SMEs with revenues of EGP 501,000 and EGP 1 mn will have to pay a flat tax of EGP 10,000. These flat taxes will be reviewed and possibly revised every five years, the source noted. The ministry is also going to tax SMEs that own trucks with a haulage capacity of over 5 tonnes, the source added. They will have to pay 1% of the average annual haulage value per truck.

All back taxes before the law are forgiven, if you go formal: Other key features of the law, include exempting SMEs from any back taxes if they are registered and licensed within a year after the act becomes the law of the land, the source noted.