Amendments to Egypt's VAT law get final approval from parliament

Gamal Essam El-Din , Tuesday 14 Dec 2021

Egypt's parliament approved Tuesday amendments to the added value tax (67/2016) to exempt a number of industrial and investment activities from the VAT tax.

Egypt parliament. (Al-Ahram)

Minister of Finance Mohamed Maait told MPs on Tuesday that the amendments to the VAT law aim to stimulate the national economy, relieve tax burdens on vital industries like the detergents industry, raise the competitive edge of the Suez Canal authority and its role in international trade. "In general the amendments aim to relieve local Egyptian industrial from many burdens, particularly the VAT, in order to be able to export and secure a surplus," said Maait.

Parliament also approved Tuesday the amendment of article 17 of the VAT law, which aims to impose a value-added tax on electronic trade. The new article obliges non-resident persons who are not registered with Tax Authority and who are selling goods and services subject to the VAT to persons who are not doing business through an institution inside Egypt to submit a  request for registration with the Tax Authority.

The amendments to the VAT law, however, did not go well with a number of MPs who said they said the new exemptions will not go any good for ordinary citizens who suffer from high rates of inflation.

Ihab Mansour, the parliamentary spokesperson of the Egyptian Social Democratic Party, said the VAT exemptions given to products like potato fertilizers, drug raw materials, and sanitary drainage equipment will not help poor and average-income citizens who will be overwhelmed by increases in other kinds of taxes (such as the stamp tax and the development fee).

Diaaeddin Dawoud, a Nasserist MP, said the exemptions granted by the new legislative amendments to the VAT law are insignificant. "While the government claims these amendments will help local productive industries, it plans to impose taxes on many products, a thing which will push inflation rates high," said Dawoud.

In response, Yasser Oman, deputy chairman of the House's Budget Committee, said the amendments to the VAT law show that the government is seriously interested in supporting local industry and local producers. "When the government supports local producers and local industry in terms of tax exemptions, this helps the prices of market products and services not to go up and in a way that does good to ordinary citizens," said Omar, indicating that "many vital industries like sanitary drainage equipment and services, animal fodder, fertilizers,  paper industry inputs, and drug and vaccine raw material will be completely exempted from the VAT."

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