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Wednesday, 8 April 2020

FinMin working on specifics of corporate income tax relief program

EXCLUSIVE- FinMin working on specifics of corporate income tax relief program: Businesses looking to pay their income taxes in installments under a tax relief program ordered by President Abdel Fattah El Sisi earlier this week will most likely be required to make three equal payments by set dates, with the final installment due by the extended deadline of 30 June, two senior government officials tell us. According to the sources, the first payment will be due on 30 April, the second on 30 May, and the third and final installment must be made on or before 30 June.

There will be no interest, fines, or late fees for anyone choosing to pay their taxes in installments by the extended deadline, as we reported yesterday. The move is a form of stimulus that will provide support to cashflows of businesses affected by the economic impact of covid-19, which so far includes a 7pm-6am curfew and the full shutdown of retail businesses on weekends.

You’re going to have to remit VAT, wage taxes and withholding taxes on time — there is no plan to extend deadlines for payments here, the sources said.

Details are still in the works: The Finance Ministry is currently drawing up regulations outlining the fine print of the directives to give businesses a helping hand amid the covid-19 fallout, the sources tell us. The regulations will determine criteria that would make businesses ineligible for the deadline extension and installment system, but it is expected that all businesses will be eligible since the slowdown has touched most industries, one source says.

Finance Minister Mohamed Maait has already finished drafting a bill that will allow Cabinet to implement El Sisi’s directives and economic support measures, according to a cabinet statement.

The state isn’t going to collect less in corporate income tax, it’s just going to have lumpier cashflow through June, the sources noted. The open question is how much the state’s take from the VAT will be depressed. Companies today are paying VAT for their sales in January and February — the authority will only be able to gauge the effect of the crisis once they begin collecting VAT on March and April sales starting next month.

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