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Tuesday, 30 July 2019

Egypt working on new income tax, VAT laws -Maait

LEGISLATION WATCH- Brace yourself for a brand new income tax law: The government is working on a new income tax law during the current fiscal year, and expects to have an initial draft ready within two months, Finance Minister Mohamed Maait said at a press conference yesterday. Maait did not provide any further details on the new legislation, but the ministry said in a statement following the press conference that there will be no changes to income tax rates.

Background: We reported in May that the government began drafting significant changes to the Income Tax Act, and even had plans to replace the legislation altogether. Tax Authority boss Abdel Azim Hussein told us that no changes to tax rates or brackets were on the horizon. The reforms would instead impact how tax appeals are handled, the ministry’s internal tax committees, and the procedures for filing tax returns. They may also include introducing a new chapter in the tax code for the treatment of online businesses, new powers to combat tax evasion, and a review of how tax incentives are structured.

Amendments to the VAT law are also in the works: The government will form a committee to amend the VAT law, Maait said, adding that there would be no changes to the VAT rate — a point the ministry reiterated in a statement following the presser. Maait’s assurances contradict a Reuters report from earlier in the day, which claimed to have seen a document suggesting that the government will review the general VAT rate in the current fiscal year.

Background: This is the first thing we’ve heard on VAT since the ministry’s VAT department head Sayed Saqr told us in May that it is planning to begin charging and remitting VAT on download sites. The Finance Ministry is currently compiling a list of websites that charge for book, movie, and song downloads, all of which will come under the scope of the VAT law, he said. The government wants to add around 500k new VAT taxpayers by 2020 and raise revenues from the tax to EGP 364.6 bn this fiscal year. VAT revenues stood at EGP 309 bn last fiscal year, Maait said yesterday, according to Al Mal. An official told us in April that the Finance Ministry plans to impose VAT on all e-commerce platforms and social media ads. Companies including Amazon’s Souq, Jumia and OLX would be required to charge VAT on all online sales.

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