VAT to generate EGP 35bn in FY 2016/2017

[DJKeefy]

Implementation of VAT to generate EGP 35bn in FY 2016/2017: Ministry of Finance official

The government is expected to collect EGP 35bn from applying the value-added tax (VAT) in fiscal year (FY) 2016/2017, Minister of Finance’s adviser for taxes Amr El-Moneir told Daily News Egypt.

The application of the VAT is contingent on the approval of the parliament.

Consideration of the VAT has been intertwined with discussions of the World Bank’s $1bn loan to Egypt. Media reports have speculated that the introduction of the VAT is one of the conditions imposed by the international lending agency for the deployment of the money. However, officials have not announced the conditions of the loan.

However, El-Moneir claimed that there has not been any pressure from outside of Egypt to impose the tax, a move that if taken would undermine the financial sovereignty of the country.

“They [the World Bank] know that we are preparing the law and that there is a need for it to be applied,” he added. “We will apply it because we want to apply it.”

Source: http://www.dailynewsegypt.com/2016/04/0 ... -official/

[A-Four]

The application of the VAT is contingent on the approval of the parliament.

Source: http://www.dailynewsegypt.com/2016/04/0 ... -official/

I think I remember, long before this parliament was formed, that I wrote on here, that any man or woman who put themselves forward as an MP would be a fool.

When this is implemented, I expect a presidential decree to reduce this to 5%, for the poorest, that is.

[Major Thom]

Yes. it could well create problems for the poor as things rise in price. Just depends on what percentage they agree on, or even if it is two tier like the UK when it first set off down this road.

[carrie]

Don't understand how vat can be charged at 5 percent for the poor and 10 percent for others, who's to judge?
Fair enough luxury items could have a higher rate of vat.

[A-Four]

Don't understand how vat can be charged at 5 percent for the poor and 10 percent for others, who's to judge?
Fair enough luxury items could have a higher rate of vat.

I suspect Carrie it will be implemented in a manner similar to the bread coupons, or in a similar way to the old milk coupons in Britain years ago through the DHSS.

[A-Four]

Yes. it could well create problems for the poor as things rise in price. Just depends on what percentage they agree on, or even if it is two tier like the UK when it first set off down this road.

It is only when you seriously look at the desperate situation of the Egyptian economy, that you realise that a time for dithering must come to an end. The implementation of the 10% V.A.T. should have come into effect, believe it or not, more than five years ago, therefore, a loss to the exchequer of more than $20 BILLION.

While Egypt continues to live by 'memorandums of understanding', it fills not the mouths of the poor, and the situation gets worse by the day. During my days in Upper Egypt, I knew many of the poor people in rural environments, I dread to think what their lives are like now, God only knows what the future will bring.

[carrie]

A Four I know Egyptians who could not be classed as poor but are certainly beginning to feel it now, constant price rises in food and other commodities no commensurate rise in salaries. Someone told me the other day to buy tomatoes because the price before Ramadan will be 12le per kilo. That's got nothing to do with VAT.

[A-Four]

It appears that the budget for 2016-17 will include another huge reduction in the state subsidy for oil and gas. From what I understand this will be cut by half, saving the Egyptian exchequer about $3.5 BILLON per year. Add to this the implementation of the V.A.T., also in June, even the ex-pats will probably feel the serious effects of this coming budget.

[newcastle]

We'll see.

Somehow, I can't see your average expat being much bothered by the state of Egypt's finances, buoyed, as most of them are, by offshore resources.

For the average Egyptian it might be a serious matter and if , in due course, that leads to civil unrest then THAT might bother the expats.

[Hafiz]

The article is thin on detail but I'm sure that the government remembers the food riots (80's I think) which nearly brought a previous government down.

I think that the only way others have done a VAT (and avoided negative effects on the poor) is, either, to exclude food and other essentials, or alter the income tax scales to compensate those on low incomes. Some might have increased government payments to offset increased living costs resulting from the tax.

To suggest that Egypt was embarking on such a politically dangerous course for a mere US$1 billion in aid stretches the imagination. Rather, they are doing it for the same reason every other country has done it: its hard to avoid, its cheap to collect and it taxes consumption rather than income (enterprise).

I wouldn't hold your breath for a UK style VAT which you can get rebated if you are a tourist and when you leave the country.

I find it difficult to believe that the Egyptian government will put a VAT on food and other basics and expect to survive the public backlash.