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Tuesday, 10 March 2020

Gov’t drops sukuks and tax breaks from export subsidy arrears program

Gov’t drops sukuk and tax breaks from export subsidy arrears program: The government has dropped sukuk issuances and tax and customs settlements from the executive regulations of the Export Subsidy Fund’s arrears program, Al Mal reports, citing unnamed industry officials. They said export subsidy arrears will no longer be paid out until companies have cleared their tax, customs and utilities obligations.

The government kicked off the new EGP 6 bn export subsidy program last September, with 40% of the fund set to be allocated as cash payments, 30% in tax and customs settlements, and 30% in non-financial support, such as technical services and participation in exhibitions.

The new program was one of the best the government had devised, but dropping sukuk (Sharia-compliant asset-based bonds) and tax and customs settlements from its executive regulations lowers its impact, said Chairman of the Ready Made Exports Council Magdy Tolba.

The developments are“negative and frustrating” for exporters, said Mohamed Al Mohandes, chairman of the Engineering Industries Chamber of the Federation of Egyptian Industries, adding that arrears should have been paid before tax obligations were expected to be settled.

The state-run Export Subsidy Fund began dispensing EGP 1-1.2 bn in overdue export subsidies last Tuesday.

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