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Monday, 18 January 2021

Hey there, informal economy (wink, wink)

The Finance Ministry’s digitalization drive shows exactly zero signs of slowing down. Up next: a pilot program kicking off in 2Q2021 for a digital inventory of real estate now that the government’s drive to bring online registry offices nationwide seems to be wrapping up. The program, which is yet to be confirmed, is being widely discussed in the domestic press, with an unnamed government official promising it will lead to a “substantial” increase in real estate taxes.

The digital inventory has been in the works for two years now. A prototype of the real estate appraisal system was ready in March 2019 and included a model database of property prices which would yield location-based values together with the help of geographic coordinate systems, head of the real estate appraisal program Mohamed Salheen told us at the time. The system is part of the proposed amendments to the Real Estate Tax Act, which are largely aimed at reducing real estate tax discrepancies.

In parallel, the Customs Agency is going to be implementing electronic Advance Customs Information (ACI), a World Customs Organization protocol that provides shipping lines, port operators and governments real-time information on the potential arrival in port (or departure from port) of dangerous goods, Finance Minister Mohamed Maait said. The trial starts on the first of April and will become mandatory for anyone pushing goods into or out of Egypt’s ports by July.

What’s ACI? Think back to when you used to travel. Remember seeing “API” on your boarding pass? That means the airline sent your name, DOB and passport information into a security database under the “API” (Advance Passenger Information) standard. ACI is API, but for freight. You can learn more about it here (pdf).

WHY IT’S SMART POLICY- For the first time in recent memory, most arms of government (including rival authorities within individual ministries) are working in concert to bring the informal economy kicking and screaming into the light. The government’s goal: To widen the tax base and reduce chances to avoid paying the taxman (or customs office or licensing authority) its due. You see this on the government side in everything from the e-tax registration system for companies and individuals to a near-complete ban on cash payments to government agencies. The Central Bank of Egypt, meanwhile, is pushing banks to promote digital transactions as part of its sweeping financial inclusion drive.

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