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Egypt's Morsi raises sales and income taxes, approves property taxes
President Morsi announces raft of changes to Egypt's tax structure - including sales-tax increases on several consumer goods, services - and amends laws regulating taxes on property
Ahram Online, Karim Hafez, Sunday 9 Dec 2012
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Morsi
Egypt's president issues a wide increase in taxation(Photo: Reuters)

Egyptian President Mohamed Morsi, who holds legislative authority, announced sweeping increases in sales taxes and stamp duties on a wide range of consumer goods and services on Sunday and amended Egypt's income and property tax laws.

Income tax brackets were also modified, and the highest bracket was changed so that annual incomes above LE1 million (instead of LE10 million) are taxed at a 25 per cent rate. The president also issued a law levying a 10 per cent tax on Initial Public Offerings (IPOs), company mergers and acquisitions.

The measures represent the implementation of an economic programme that Egypt has proposed to the International Monetary Fund (IMF) in order to be eligible for a $4.8 billion loan.

The measures are aimed at reducing public deficit through increasing state revenue.

Morsi has already reduced subsidies on butane gas and electricity as part of a government austerity programme.

Among other products, sales taxes were increased on steel, cement, soft drinks, beer and cigarettes.

Morsi also raised sales taxes on a variety of services, including mobile-phone services, air-conditioned transportation, and cleaning and security services, among others.

He also doubled stamp duties on bank facilities and loans. A new scheme for duties on advertising was also put in place, with the highest bracket standing at 25 per cent instead of the previous 15 per cent flat rate.

The new legislation also stiffens penalties for tax evasion.

As for the property tax law, the exemption level was raised from properties valued at LE500,000 to those worth LE2 million. This will become effective as of 1 July of next year. Single home owners are not exempted from the tax.

The law levies a 10 per cent tax on annual rent for properties with market values of LE2 million after deducting 30 per cent of this value for maintenance purposes.

The following is a brief summary of the new changes to Egypt's tax structure:

- Steel rebars used for construction will be subject to a 10 per cent sales tax.

- Taxes on alcoholic beer will be increased from 100 per cent (with a minimum of LE200 per 100 litres) to 200 per cent (with a minimum of LE400 per 100 litres).

- The single tax on cigarettes will be raised from LE1.35 to LE2 per pack for locally produced cigarettes and to LE2.50 for imported cigarettes.

- Taxes on shisha (water pipe) tobacco will be increased from 50 per cent to 150 per cent.

- Taxes on local and imported wines will be raised to 150 per cent from 100 per cent.

- Taxes on cooking oil will be set at 5 per cent of the sale value instead of set per-tonne levies.

- Taxes on mobile-phone calls will be increased from 15 to 18 per cent.

- New sales taxes will be levied on fertilisers, pesticides and soft drinks, among others.

Income taxes

Modifications to the income tax structure will also be implemented, effective Sunday. The new Egyptian income tax structure will be as follows:

First segment (LE5000 or less): Exempted

Second segment (LE5000 – LE30,000): 10 per cent

Third segment (LE30,000 – LE45,000): 15 per cent

Fourth segment (LE45,000 – LE1 million): 20 per cent

Fifth segment (LE1 million or more): 25 per cent



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6



RJ
13-02-2013 12:29pm
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New Income Tax
Quick Question does the new income tax structure apply to annual or to monthly salaries?
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peewee
11-12-2012 10:23am
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oh dear
Well that will hit the hoilday maker hard in the pocket so best thing to do is stay away from egypt that way the only people that are beeing ripped off are there own
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Nora
10-12-2012 01:48am
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When Money Grows on Trees
there is cost for all these protests, lack of productivity, smoking and other bad habits. The Government doesn't have money, look at Greece and Spain. The proposed taxes and fees are below the norm of many countries. It is laughable that some, in this post, are complaining, or trying to blame Morsi for the prorated scale. Mubarak's has floored Egypt. Where have you been?
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Mustapha Pakistani
10-12-2012 01:28am
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Taxes
We should object if Akhwan are found financially currupt subsequentl. But if the taxes are for thr expenditures for the country then we should wait. I am paying more then 25% tax on my salary being in uk. Taxes are very high in western countries even up to 50%
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Karim
09-12-2012 10:51pm
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Haraam AlaikYa Ra'ees Muslim
All of these taxes are Haraam although I guess Beer is Haraam anyway and they have no basis in Islaam. Many of these are indiscriminate and hit the poor unfairly. So Mursi is reaffirming his commitment to capitalist economic policies and reaffirming that having a beard and leading people in prayer means very little in terms of bringing true justice to Islaam. Anyway he has already given his assurances to the American business men and the IMF!!?
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Khansian
10-12-2012 03:16am
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How is this Haraam?
How are these taxes haraam?
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Dr. Malek Towghi (Baluch) --USA
09-12-2012 10:20pm
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The Unwise Do What the Wise Do, But ....
I wish President Morsi had concentrated on such and other basic administrative, economic and educational problems and the terrible unemployment issue, recruiting honest, able and RELEVANTLY educated and trained persons for his Cabinet & Administration including women & Non-Muslims on a non-partisan basis from the very beginning of his presidency INSTEAD OF kowtowing to the Salafi Obscurantists and trying to become a Muslim Pharoah-Fuhrer for Egypt. There is a Persian/Farsi folk Word of Wisdom /Mathal that says:"An unwise person does exactly what the wise do, but after making a big mess" = HAR-CHE DAANAA KONAD, KONAD NAADAAN; LEEK BA'D AZ KHARAABEE-YE BESYAAR.
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