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Wednesday, 20 January 2021

Egypt parliament committee approves tax law amendments to support businesses hurt by coronavirus

The committee also approved amendments to the income tax law and an EGP 10 billion allocation to fight the coronavirus

Gamal Essam El-Din , Saturday 18 Apr 2020
File photo: Egyptian parliament (Photo: Reuters)
File photo: Egyptian parliament (Photo: Reuters)
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 The Egyptian parliament's budget and planning committee approved in an urgent meeting on Saturday a new batch of government measures to mitigate the negative impact of the coronavirus.

At first, the committee approved new government-drafted amendments to the real estate tax law (196/20080).

The committee met in the Shura Council hall, with all members wearing face masks and sitting at least one metre apart from each other.

Minister of Finance Mohamed Maait, who attended the meeting also wearing a face mask, told the committee that the legislative amendment aims to give exemptions to industries and businesses negatively affected by the precautionary measures taken to fight the coronavirus.

"These amendments were approved by the cabinet and aim to relieve industries and businesses of some of the tax burdens to help them weather the economic storm of the coronavirus," said Maait.

The amendment states that land owned by industries and businesses are exempted from the real estate tax provided that these lands are used in industrial and production activities.

The executive regulations will give the finance minister the power to estimate the value of the tax exemptions and determine how long they will be in place.

"And upon a report to be submitted by the finance minister, the cabinet will decide whether industries using their affiliated lands in industrial, strategic and service activities are eligible for real estate tax exemptions," said the government report on the amended law.

Meanwhile, the committee also approved government-drafted amendments to the income tax law.

Ramadan Seddiq, advisor to minister of finance, told MPs that the amendments aim to achieve social justice, particularly for low-income citizens and state employees.

"The amendments help these brackets relieve some of the income tax burdens, and I can say that these amendments will help a low-income state employee raise his salary by EGP 2,000 a month," said Seddiq.

The committee, however, decided to postpone taking a vote on the amendments until Tuesday and only after the finance ministry submits lists of the income tax brackets and the financial benefits which will be granted.

The budget and planning committee also approved a new budgetary allocation estimated at EGP 10 billion to be earmarked to mitigate the negative economic impact caused by the coronavirus.

Maait explained that due to the critical conditions imposed by the spread of the coronavirus, the government was forced to ask parliament to amend the 2019/20 budget to allocate the EGP 10 billion.

"This additional allocation aims to help the day and seasonal labourers who were very negatively affected by the precautionary measures taken to contain the coronavirus, not to mention that it also aims to push the wheels of production in many sectors," said Maait, also explaining that "the EGP 10 billion is part of an emergency plan estimated at EGP100 billion which was approved by President Abdel-Fattah El-Sisi on 14 March to mitigate the economic cost of the coronavirus on Egypt."

"President El-Sisi asked me whether I can save EGP 100 billion from the budget's reserves to mitigate the economic cost of the coronavirus and I said yes I can," said Maait. 

"Egypt's economy has shown a lot of resilience in standing up to the coronavirus storm, not to mention that most world financial institutions such as the World Bank and the IMF have agreed that the Egyptian economy will be the only one which will maintain a high economic growth even after the end of the coronavirus crisis."

"We are one of very few countries – and the only country in the Arab world and the Middle East – which will achieve a high economic growth," said Maait, insisting that "once the coronavirus is over, Egypt's economy will be quickly back to its normal high growth and strength."

"We implemented a very harsh economic reform programme and we do not want to be exhausted again and return to a vicious circle," said Maait.

The committee also approved a new government-drafted law on "financial measures necessary to contain the negative impact of the coronavirus on productive, economic and service sectors."

The law gives the cabinet the power to intervene to suspend the payment of certain taxes and other financial obligations such as social insurance or allow them to be paid in long-term instalments.

The law states that the postponement will be for a renewable three-month period, and stipulates that businesses are not to fire workers or even cut their salaries.

All of the above economic measures are expected to be approved by parliament in its plenary meetings scheduled for Tuesday.

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