The Shura Council is expected to deliberate on the proposed tax reform draft law within 48 hours, after the government adjusts a number of articles, said Minister of Finance Al-Morsi Hegazy, during a Ministry press conference, Tuesday.
“The new amendments are not numerous,” he said. “They include increasing the maximum level of imposed taxes on wages to reach 25% annually on net profits above EGP 1m.”
He added that the income tax exemption bracket had widened to reach EGP 12m annually instead of EGP 9m.
“These tax reforms are just a draft law, and nothing more,” continued Hegazy.
Sales taxes will increase from 2% to 5%, with even more taxes to be imposed on six non-essential products types, he said.
Hegazy also added that there will be a new 0.001% stock market tax imposed on all transactions.
“Expected revenues from stock market taxes will be around EGP 450m,” said Hegazy’s assistant Hani Qadri, who took over after Hegazy left 15 minutes into the press conference. “This expectation is based on transaction volumes during the last three years, which were very low; but if we base our expectations on 2008 volumes, we can say that revenues will be around EGP 800m.”
Customs taxes will be reduced for materials used in industrial manufacturing, while taxes will surge on “unnecessary imported products”.
“There will be no change in real estate taxes,” said Hegazy. “Except for exempting those who own houses costing more than EGP 2m; this is expected to be executed at the beginning of July 2013,” said Hegazy.
“Twenty-five percent will be fixed taxes annually on all corporations” said Qadri.
For diesel, oil and LPG pipelines, a smart cards system will be introduced for subsided diesel and oil. “But if they [people] want more, they will have to pay for non-subsided fuel,” said Qadri.
He added that the smart cards system is expected to come into effect from the beginning of July 2013.
Subsidies will be removed from industries consuming intensive energy, while food industries will remain subsidised.
“We are trying to lighten the general debt by distributing burdens,”said Qadri.
Before leaving, Hegazy called on the rich to abandon the subsidies they currently receive to support the country’s flagging economy.
“Political stability is a condition for achieving economic stability,” added Hegazy, who also said that tax revenues had decreased as a result of recent civil disobedience and protests.