Minister of Finance Amr El-Garhy said that the ministry is preparing a new legislation for income taxes, as part of its efforts to reform the tax and customs system, which also includes passing a new customs law and another one for tenders and auctions.
“We target using information technology on a larger scale to achieve full connectivity between the stakeholders and concerned authorities,” El-Garhy said. The minister emphasised that he will run wider community dialogue about all new legislations soon, including the small- and medium-sized enterprises (SMEs) accountability law.
According to El-Garhy, the ministry targets to increase the revenues ratio to 15-16% of the GDP in the coming years instead of 12.5% currently. El-Garhy added that when taxes reach 15% of the GDP, it will reduce the budget deficit by 3%.
The minister stressed that there will be no tolerance in collecting the state’s rights. He noted that increasing tax revenues means reducing the budget deficit, and thereby, reducing debt, interest rates, inflation, and creating financial expansion which allows the government to implement better programmes for social protection, support producers, and improve living standards.
El-Garhy said that there are current pressures on the state budget, companies, and institutions, after the Egyptian pound’s flotation, price hikes, increase in interest rates, and the deceleration of growth. However, such symptoms will begin to decline within six months to a year from the beginning of the reforms.
“It’s illogical. Our exports stood at $18bn, and trade deficit reached $50bn, while similar states—at a similar level as our economic development—exports reached $150-$200bn,” El-Garhy said.
He pointed out that the previous financial conditions and exchange price stability in the past six years were not normal and that the government was unable to support the industry as it should.
He said that facing the disruption of the exchange price and its consequences and difficulties is in Egypt’s interest and the interest of industry and exports.
The minister revealed that he will lead a delegation to promote US dollar denominated bonds abroad this week and that the targeted growth in the fiscal year 2016/2017 has reached 4% rather than 5%.