Egypt imposes new VAT tax on cigarettes in Egypt

Gamal Essam El-Din , Monday 30 Oct 2023

Egypt’s parliament – the House of Representatives – approved on Sunday a government-drafted amendment to the 2016 VAT law to impose a tax of EGP 0.50 on tobacco products sold on the local market.

cigarettes
File Photo: A law imposing a new VAT tax on cigarettes in Egypt. Al-Ahram

 

Fakhri El-Fiqi, head of the House’s Planning and Budget Committee, told MPs that the new tax will be imposed on hot tobacco (cigarettes) and liquid tobacco (vape) to help companies put the right price for their products, achieve profits, and stabilize the cigarette market which has seen a lot of chaos in recent months.

“The new amendment will also encourage tobacco companies to increase production in a way that shall stem the rise in cigarette prices and satisfy consumers,” said El-Fiqi.

He also said the new tax will generate as much as EGP 8 billion in revenues for the state budget.

“This is a very positive development, but at the same time the government should do its best to supervise the market and encourage companies to increase production,” said El-Fiqi, indicating that the last time a tax was imposed on tobacco prices was in 2022.

Hesham El-Hosary, chairman of the House’s Agriculture and Irrigation Committee, said the new tax goes in line with recommendations drafted by the World Health Organization, which say that the more cigarettes are expensive the less the number of smokers and the less the number of those who die from smoking.

“There is no question that the hike in cigarette prices will push more citizens, particularly young people, to give up smoking,” said El-Hosary.

Ayman Abul-Ela, deputy chairman of the House’s Human Rights Committee, said that smoking is highly dangerous for health and that people mostly die from smoking.

Many world countries have recently resorted to imposing higher taxes on cigarettes to push people to give up smoking, according to Abu-Ela.  

“Anyhow, prices of cigarettes in Egypt are still low compared to other countries and in a country like France a pack of cigarettes is sold at as high as EGP 600,” Abul-Ela added.

 

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