Egypt aims to increase tax revenue by introducing VAT: Official

Ahram Online, Monday 18 Nov 2013

Sales tax revenue in the past fiscal year reached LE80 billion

Mamdouh Omar

Egypt's sales tax revenue reached LE80 billion in the last fiscal year, said the head of Egypt's Customs Authority, Mamdouh Omar, at a seminar at the Egyptian Centre for Economic Studies (ECES) on Monday.

The government is targeting LE130 billion in additional tax revenues for the current fiscal year, said Omar, if it manages to implement a new Value Added Tax (VAT) system.

Omar added that a law is being drafted for the introduction of VAT, with provisions to avoid the negative effects of its application gradually on different segments of society so as not to burden the poor.

The tax base will be split into three segments so that VAT will not exceed 3 percent for lower-rate taxpayers, to encourage them to use bills in their future dealings, and contribute to a just taxation system.

The official explained that a VAT system only works if it is applied to all goods and services without exception, although in Egypt's case goods such as government-subsidised oil, flour, and wheat would be exempted.

Egypt's interim government is aiming to reduce its budget deficit to 9 percent by the end of the fiscal year in June, from a current rate of 14 percent.

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