The House of Representatives is awaiting the introduction of a tax law for the small and medium-sized enterprises (SMEs) by the government.
The parliament’s Planning and Budget Committee recommended that the tax rate for the proposed law be reduced to 10% instead of 22.5%, member of parliament Yasser Omar said.
Omar expects a draft of the law to be introduced to the House of Representatives before the end of 2016, for discussion in the parliament during the second legislative term.
The House of Representatives approved the Value-Added Tax (VAT) Law at a rate of 13% during the current fiscal year, with plans to increase this rate to 14% during next fiscal year.
Fellow member of the Planning and Budget Committee Talaat Khalil said that reduction of tax rate for SMEs is not enough, and should be extended to facilitated lending by the banking system and facilitating licensing processes in municipalities, civil protection, and industrial security.
Khalil believes that the state should lower the interest rate on these projects and determine what projects require for supporting, developing, and marketing production programmes by allocating the purchase share to the state.
President Abdel Fattah Al-Sisi announced a EGP 200bn initiative for lending to SMEs within five years at an interest rate of 5%; however, the initiative may collide with the current legislative infrastructure necessary for lending operations.
A member of the Association of 1,000 Factories in east Cairo said that SMEs are facing great difficulties in borrowing from banks due to impossible conditions set by the banks with regards to civil protection and industrial security.
He added that although 70 factories requested loans, due to the stringency of the loans conditions and terms, only two of them were actually able to obtain the loans.