Amr El Monayer, deputy finance minister for tax policies, said that increasing the value-added tax (VAT) to 14% will not impact the prices of cigarettes, since they are subject to a fixed tax within the table tax of the VAT law. The goods within the table cannot be impacted by any VAT value increase except with a legislative amendment.
He noted that the VAT rate of 14% was decided in the law since it was issued early September 2016, but the implementation started at 13%.
He pointed out that all owners of activities subject to VAT are taking into account this full percentage at the beginning, and know that it has already been decided to reach 14% that began in the new fiscal year on the first of July.
El Monayer said that all the table goods will not see any new tax increase.
He pointed out that the table goods include all tobacco products, such as cigarettes and flavored tobacco; next to fuel, such as benzene, diesel, fuel oil; in addition to edible oil, marmalade, baked goods, processed potatoes, fertilizers, pesticides, gypsum, soap, contracting services, air conditioning, transportation between governorates, professional services, consultancy, media production, and cinema.
El Monayer explained that implementing a VAT of 14% starting from today will only have a limited impact on the goods subject to the law, adding that the 1% increase will not affect the exempted items, where the law exempts 57 categories of services and good, such as food commodities, transportation services, health, education, banking, insurance, and cultural sectors, including books, magazines, newspapers, and assistant devices.
The government shifted from tax on sales of goods to value-added tax for goods and services in September 2016. The tax was set at 13% at implementation, then rose to 14% at the beginning of the new fiscal year.