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Monday, 30 September 2019

Gov’t looking to impose development tax on cars

EXCLUSIVE- Gov’t mulls industry-wide development tax for the automotive industry: The government is considering imposing a development tax on all imported and locally produced cars, two government sources told Enterprise. The idea of a sliding tax that varies with engine size is now being discussed by a ministerial committee tasked with revamping the so-called automotive directive, which would offer a measure of protection to domestic assemblers facing competition from EU, Turkish and Moroccan imports

At the same time, the committee is debating whether to lower import duties on non-EU cars while simultaneously hiking taxes across the board. Car imports from the EU are now entering Egypt at zero customs.

So how would this help local assemblers? The short answer: rebates. Under one model now being discussed, the two sources said, local assemblers could become eligible for a rebate of the full development tax if they meet one of three conditions: hike production output from their assembly lines; “significantly” increase their production (or use of) locally made car parts; or export more.

Look for this to go before the House, the source said: The measures would collectively require approval by legislators.

Background: We’re having flashbacks to the old automotive directive, which was designed to allow local manufacturers to better compete with EU, Moroccan and Turkish imports that receive customs breaks here in Egypt. The previous legislation had stalled last year in the House, in no small part thanks to extensive lobbying by EU car importers. This had led the government to quit seeking new legislation for the auto industry and provide incentives through amendments to the Customs Act.

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