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Social media experts demand low tax rate on social media ads to avoid affecting market - Daily News Egypt

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Social media experts demand low tax rate on social media ads to avoid affecting market

Without Facebook, Google, different social media platforms’ cooperation, there is no mechanism or methodology to determine costs of such ads, says expert

The Egyptian Parliament is considering a draft law to impose taxes on companies that advertise on social networking platforms, including Facebook and Google.

The representative of the communications and information technology committee of parliament, John Talaat, said that parliament is in strong agreement on the draft law.

He said in press statements that the new law will be imposed on local Egyptian companies for paid and unpaid advertisements on social media, which will bring in more money for the government.

Ahmed Refaat, member of parliament’s telecommunications and technology transfer committee, said that the law, in the case that it is applied, will provide the state large sums of money from the ads that circulate daily on social networking pages, especially on Facebook.

Refaat pointed out that large companies resort to advertising their products on all social networking sites, because it is free and provides effective return for the owners of companies, noting that advertisements form a large source of income for Facebook.

Refaat explained that the committee is working on the resolution of several issues before the end of parliament’s third session, led by completing the discussion on the draft law.

The new Minister of Finance Mohamed Moeit confirmed that his ministry is preparing to set values for advertising taxes on social media networks, such as Google, Facebook, and Twitter, immediately after the issuance of the executive regulations for the law.

For his part, Mohamed ElEzaby, a certified digital marketing consultant, strategist, and the founder and managing director of Mobile Matters Consultancy, said that advertising companies are making big profits and revenues without paying taxes, and it is the country’s right to impose taxes on these websites as they are operating in the Egyptian market.

He explained that social media companies have accounts at Egyptian banks and acquired their money without paying any taxes.

ElEzaby called on the government to apply taxes on social media companies and not on Egyptian advertising companies because they have more taxes and burdens they cannot afford.

He elaborated that in the case of the law’s application, social media companies will raise their advertising fees. However, he said, if the government imposes taxes directly on advertising companies, it will pose a great burden on them.

He added that the reasonable percentage in his point of view would be 5% of the total value of their revenues.

He commented, “parliament or government agencies did not open talks regarding these issues with the sector’s stakeholders.”

Meanwhile, the founder of the startup Instashe, Ahmed Iraqi, said that there is no idea behind such a draft law except that it would impose more taxes to gain the government more financial sources, explaining that law may affect the movement of the e-commerce sector.

A digital marketing expert said that the proposal to tax both paid and unpaid ads, on social networking outlets including Facebook and Google, is impractical. Without the cooperation of Facebook, Google, and different social media platforms, there is no mechanism or methodology to determine the cost of such ads to begin with, and it is highly doubtful that these platforms will agree to cooperate with the Egyptian government, he said, as the implementation of such taxes would lower their profits from advertising.

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