A coalition of non-governmental organisations (NGOs) released a statement on Sunday, opposing the application of the value-added tax (VAT).
In that regard, the Egyptian Center for Economic and Social Rights (ECESR) and the Association for Freedom of Thought and Expression (AFTE), along with the General Syndicate of Sales Tax Workers and a number of independent trade unions and syndicates, sent a letter on 17 September to the President, Prime Minister, Minister of Finance, and head of Tax Authority.
The coalition said in their statement that, despite the fact that VAT is widely-applied in more than 130 countries, it is one of the taxes that “prejudice” the rights of the citizens as it is applied on all products and services, with the consumer eventually bearing the effect of the tax.
The government considered replacing the existing General Sales Tax with VAT; a type of consumption tax applied in the European Union that is placed on a product whenever value is added to a stage of production and at a final sale.
In their statement, the rights organisations blamed the government for not engaging the involved parties, such as economists, civil society organisations and employees of the Tax Authority, in the discussions of the draft law.
The statement also added that the government should disclose its plans to reform taxation policies, and also the economic plans and public policies, in the current fiscal year.
The application of the tax is expected to generate EGP 12.5bn in revenues, according to official estimates.
However, sources with the finance ministry noted in August that the VAT draft law is still under discussion, and the date for its application has not yet been determined.
President Abdel Fattah Al-Sisi’s government has increased the expected amount of tax revenues to be collected during the 2014/2015 fiscal year to EGP 364bn compared to EGP 358bn last year, representing a 1.6% increase, according to Finance Minister Hany Kadry Dimian.
With regard to this target, Al-Sisi issued a presidential decree in July to increase the tax by 50% on cigarettes, 200% on beer and 150% on other alcoholic beverages. The government has also imposed tax on capital gains and monetary dividends earned on the stock market, estimated to deliver between EGP 5bn and EGP 6bn to the treasury.
In efforts to increase tax revenues, Chairman of Tax Authority Mostafa Abdel Qader in September announced his aim to fully eliminate tax exemptions, adding that Egypt needed a mechanism to eliminate tax evasion.