A conclusion to the draft law of the value added tax (VAT) is approaching and the Ministry of Finance will post the amendments on its website for community dialogue, said Finance Minister Hany Kadry Dimian in a Saturday statement.
Dimian explained that the proposed amendments include the following: for industrial activities, tax will rise from EGP 54,000 to EGP 500,000, while tax on commercial activities will rise from EGP 150,000 to 500,000.
The modifications also include the expansion in the system of discounting production inputs from the tax, in order to alleviate the tax burden on consumers, with unifying the general price of the tax and limiting exemptions on products and services with a social impact, Dimian said.
The issuance of the law was delayed due to the ministry’s keenness on issuing it through a “complete consensus”, the minister noted.
The Ministry of Finance plans to increase tax revenues for the fiscal year (FY) 2015-2016 to EGP 422bn, compared to EGP 364.2bn in FY 2014-2015, a growth rate of 16.8%. The ministry said it will undertake a comprehensive development of the taxation system, to include raising the efficiency and performance of tax-collection entities.
The International Monetary Fund (IMF) recently criticised the postponement of tax on gains for two years. The government targets a financial deficit at 9.9% in FY 2015-2016, compared to 10.8% for the current FY 2014-2015.
The government has also suspended the 5% tax on income of more than EGP 1m a year. The expected revenues over the next FY 2015/2016 are at EGP 612bn, with an increase of 26%, while expenditures amount to EGP 885bn, according to the Ministry of Finance statement.
According to the Head of Tax Authority’s press releases, Abdel Moneim Matar, tax revenues over 10 months of the current FY 2014/2015 amounted to EGP 240bn.