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Wednesday, 15 December 2021

THIS MORNING: Ads are now subject to VAT, but not the stamp tax. Plus: Fate of sugar tax still unclear.

Good morning, wonderful people, and welcome to yet another busy December morning. We have a ton of news to get through today, so let’s jump right in with a quick tax update from our elected representatives:

The House of Representatives is going on a short recess until after Western Christmas, with plenary sessions suspended until Sunday, 26 December, according to Al Shorouk.

Before their two-week break, MPs gave final approval to amendments to the VAT Act that had been laid out in a report (pdf) by the House’s planning and budgeting, economic affairs, and legislative and constitutional committees. The full text of the bill has yet to be released.

What we know so far: The changes impose the 14% value-added tax on fully-finished “broadcast” advertisements, replacing the 20% stamp tax to which they were previously subject. The measure defines “broadcast” ads as advertisements on TV, radio, outdoor billboards and the interwebs. VAT is collected and remitted by the seller, whereas it is presently the buyer’s responsibility to remit the 20% stamp tax on any ad they purchased. The measures also make goods and services from special economic zones (SEZ) VAT-exempt, affording projects set up in SEZs the same tax treatment as those in freezones.

What we don’t know: The fate of the so-called sugar tax, which would impose the 14% VAT on crackers and sweet pastries, instead of the current 5% schedule tax.

NOT PASSED yesterday: A barrel of new taxes and development fees the Madbouly cabinet had proposed earlier in the week. The proposal caused a ruckus in the House and led House Speaker Hanafi El Gebali decided yesterday to push the vote until after MPs return from recess on Boxing Day. Ala Mas’ouleety’s Ahmed Moussa took note of the story last night (watch, runtime: 38:17).

^^ We’ll have the full details on the bill in tomorrow’s edition of EnterpriseAM.

MEANWHILE- It’s day two of a closely watched Fed meeting, with analysts waiting to parse Jay Powell’s statement later today for signs of whether and when the US Federal Reserve will start to taper its stimulus program — and when it might raise interest rates.

ALSO- The IMF is nudging the Bank of England (BoE) to raise rates at its upcoming meeting in light of spiraling inflation, which the international lender sees rising well above the bank’s 2% target to 5.5% by early next year, the Financial Times reports. A tight labor market coupled with uncertainty over Omicron’s impact on economic growth could allow inflation to continue to rise, the IMF warned.

REMINDER- Tomorrow is Egypt’s final interest rate day of 2021: All 11 economists and analysts we surveyed in our Enterprise Rate Poll expect the Central Bank of Egypt’s MonetaryPolicy Committee to leave interest rates unchanged when it meets this Thursday for its final gathering of the year. The still-unfolding situation with the Omicron variant is giving policymakers everywhere pause and a lower-than-expected November inflation reading could give the MPC some breathing room.

THE BIG STORY ABROAD– It’s all Omicron, all the time. The Financial Times is leading with a report claiming that while Pfizer’s jab provides poor protection against the Omicron variant, it does give 70% protection against hospitalization for those who become infected. The salmon-colored paper also has a good explainer on why covid boosters seem to provide good protection against Omicron. The New York Times and Bloomberg also have Omicron above the first scroll, while the Globe and Mail reports that Canada could impose a ban on entry for non-nationals who aren’t travelling for an “essential purpose.”

ALSO- DC standing up for Muslim rights in China: The US House of Representatives has passed a bill that would ban imports from China’s Xinjiang region as part of what Reuters says is”part of Washington's continued pushback against Beijing's treatment of its Uyghur Muslim minority.” Axios is also leading with the story.


The US Senate voted to raise the government’s borrowing limit by USD 2.5 tn, in a last-minute effort to avert default, the Wall Street Journal reports The Senate shipped the bill to the House for final approval. The move would help the government avoid a stand-off between Republicans and Democrats over the debt ceiling until after next year’s midterm elections. US Treasury secretary Janet Yellen has been raising alarms that the government is at risk of default for weeks, prompting Republicans to concede to a one-time rule change allowing Democrats to raise the debt ceiling should the majority vote accordingly.


The UN Convention Against Corruption in Sharm El Sheikh is on its third day today. The event wraps this coming Friday, 17 December.

The Arab Conference on the Peaceful Uses of Atomic Energy in Aswan is underway and runs until tomorrow.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.


*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: Enterprise’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development as well as social infrastructure such as health and education.

In today’s issue: We look at the current state of play of the Light Rail Train (LRT), which will run from El Salam to the 10th of Ramadan via the new administrative capital. The LRT is slated for inauguration next year and is expected to help bolster development in certain governorates in the country.

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