Egypt to raise sales tax on 6 goods, expects $2 bn in extra revenue

Ahram Online, Thursday 7 Mar 2013

Ahram Online publishes details of expected sales tax increases obtained from anonymous finance ministry source, including levies on soft drinks, steel rebars, cement, cigarettes


Egypt plans to raise sales taxes on six goods, aimed at increasing state revenues by around LE13 billion (roughly $2 billion), in its quest to curb the budget deficit to meet  International Monetary Fund (IMF) preconditions for a $4.8 billion loan, a source inside the ministry of finance, requesting not to be named, revealed to Al-Shourk daily newspaper on Thursday.

Cigarettes, soft drinks, steel rebars, cement, mobile phone calls and alcoholic products will see price hikes once Egypt's upper house of parliament, the Shura Council, ratifies the new levies.

A version of the tax hikes was first enacted last December by President Mohamed Morsi before he shelved the proposal within hours citing public criticism.

A new tax structure is part of a governmental economic reform programme recently finalised and released by the Cabinet.

In the new programme, single tax on cigarettes will be raised from LE1.25 to LE2 per pack for locally manufactured and imported cigarettes. The government expects cigarettes to be the largest contributor to the country's tax revenues with additional projected revenue of LE3.5 billion (roughly $0.52 billion).

Taxes on mobile phone calls will be increased from 15 to 20 percent, which is expected to add some LE1.7 billion (roughly $0.25 billion) to tax revenues each year.

Both steel rebars and cement will be subject to a 10 percent sales tax compared to eight and five percent respectively at present. Accordingly, tax returns from cement and steel rebars are expected to range between LE1 billion (roughly $0.15 billion) and LE1.2 billion (roughly $0.18 billion) annually, respectively.

The government will also raise taxes on shisha (water pipe) tobacco from 50 per cent to 150 per cent.

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).

Taxes on local and imported wines will be raised from 100 per cent to 150 per cent. The government expects to collect  an additional LE500 million (rougly $74 million) in annual tax revenues from alcoholic products.

Soft drinks will see first time taxes on prices at the consumer end worth 25 percent, a measure that is expected to generate some LE800 million a year (roughly $118.5 million).


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