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Monday, 9 September 2019

Egypt mulls raising stamp tax fees on everything under the sun

EXCLUSIVE- FinMin mulls raising fees on electricity consumption, car licenses, bank transactions, and a whole lot else under Stamp Tax Act amendments: A Finance Ministry committee mandated with drafting amendments to the outdated Stamp Tax Act is proposing introducing changes to the stamp tax imposed on electricity consumption and licensing fees for cars and shops, government sources tell Enterprise. The proposal would also see changes introduced to the tax rate imposed on bank transactions, telephone calls, and building licensing fees, among a host of other things. The committee is not looking to hike the tax on water and gas utility bills. The changes, if approved, could raise the state’s tax revenues by 20%.

Electricity consumption for households, industry, commercial spaces: The proposed changes would unify the stamp tax on electricity consumption for households and industry to EGP 0.01 per kWh. Households consumption has so far been exempt from the stamp tax, while industrial consumption is currently taxed EGP 0.006 per 10,000 kWh. The committee is also proposing hiking the stamp tax on non-industrial electricity consumption, including for commercial spaces, roads, and communal use areas such as apartment building lobbies to EGP 0.05 / kWh, up from a current EGP 0.03 / kWh.

Car licensing fees: Licensing fees for heavy trucks weighing more than 15 tonnes would cost EGP 30 instead of EGP 18. The stamp tax on driving licenses for operating a five-tonne truck would increase to EGP 20 from EGP 12. The tax on licenses for passenger vehicles would also increase to EGP 10 for cars with four or fewer cylinders (up from a current EGP 4), while licenses for cars with more than four cylinders would increase to EGP 20 from EGP 12.

The stamp tax on your salary is also set to increase: The stamp tax on individuals’ salaries would also increase under a tier system, with the first EGP 500 of any salary exempt from the tax. That means if you earn EGP 10,000 per month, your taxable income would be considered EGP 9,500. The tiers would be as follows:

  • Those earning EGP 500-5,000 would be taxed 0.50%;
  • Monthly salaries between EGP 5,000 and EGP 10,000 would be taxed 0.55%;
  • All salaries exceeding EGP 10,000 would be subject to a unified tax rate of 0.60%.

Issuing government certificates and documents: The fee on issuing elementary education certificates would rise to EGP 5 from EGP 1.20, while middle and high school certificates would be subject to a EGP 10 and EGP 20 fee, respectively. Certificates for undergraduate, masters, and PhD degrees would also be hiked to EGP 30, EGP 60, and EGP 80, respectively. Vocational degree earners would be required to pay a EGP 20 fee to receive their certificate. Getting married and divorced will also get a bit more expensive: The fee on marriage certificates would rise to EGP 50 from EGP 15 currently, while divorce papers would be subject to a EGP 100 fee, up from EGP 30.

Also expected to see a change under the proposed amendments:

  • Bank transfers within Egypt and outside of the country would be subject to a 0.4% stamp tax;
  • Licensing fees for quarries and brick factories would rise to EGP 500 from EGP 300;
  • The stamp tax on construction licenses would rise to EGP 50 from EGP 30;
  • The stamp tax on shipping certificates would rise to 20% from 18% of the value of the goods being shipped, with a ceiling set at EGP 0.60.

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