Daily News Egypt

Egypt targets 16.5% tax-to-GDP ratio within 5 years: Finance Minister - Daily News Egypt

Advertising Area

Advertising Area



Egypt targets 16.5% tax-to-GDP ratio within 5 years: Finance Minister

Country’s tax system is witnessing "development revolution" under President Al-Sisi, says Maait


Egypt’s is targeting a tax-to-GDP ratio increase of 2.5% over the next five years, to rise from 14% to 16.5%, according to Minister of Finance Mohamed Maait.

Maait added that the country’s tax administration system is witnessing its largest “development revolution” under President Abdel Fattah Al-Sisi. This comes off the back of historic reforms having been implemented, that are leading to an expansion in the country’s tax base.

Recent efforts have also seen the Ministry of Finance laid the foundations for tax justice, as well as a more accurate survey of the country’s tax community.

Additionally, the ministry has merged the informal economy with the formal economy, which has raised Egypt’s tax revenues by as much as 111% during the past four years. The reforms in Egypt’s taxation system have stimulated investment, and provided the basis for the country’s improved economic performance and private sector activity.

Maait added that, in light of the efforts exerted to expand the tax base, the target is to increase tax growth by 0.5% of GDP annually, while maintaining the stability of tax policies.

The minister indicated that a trial run of an automated unified tax procedures system will be carried out on middle and large financiers, as well as the major liberal professions, at the end of December.

The filing of tax declarations through this system will take place in those centres as of the next fiscal year (FY). He pointed out that the system of automated standardised tax procedures will be circulated across four stages within two years, starting from next January.

Maait confirmed that companies will be expected to provide electronic invoices over an extended period starting later on in 2020. A total of 134 companies will be obliged to apply electronic invoices from mid-November, with a further 340 companies required to do so from February 2021, and the rest of the large financier centre companies in May 2021.

The system’s application will be extended to cover the rest of Egypt’s taxpayers through a central electronic system. The automated system will allow the Egyptian Tax Authority (ETA) to track all commercial transactions between companies through the electronic exchange of invoice data. The tracking will take place in real time, and without the reliance on paper transactions.

Maait noted that there is continuous coordination with the Ministry of Communications and Information Technology, in which artificial intelligence (AI) will be used to modernise Egypt’s tax administration system.

The minister explained that the necessary procedures have been started to implement the tax collection monitoring project, which is taking place through the electronic communication system.

He added that over 577,000 individuals have now registered on the VAT database, with a growth rate of more than 150% compared to the end of June 2018. More than 289,000 had registered on the electronic declarations system by the end of July.

Maait pointed out that the risk analysis and business intelligence system has revealed 10,000 potential tax evasion cases for the tax period between March and May 2019, which were divided into high, medium and low risk cases.

The Ministry of Finance has finished examining 2,095 of these cases, with 830 found to have undertaken tax evasion. The ministry has collected EGP 288.454m in paid tax dues from 257 of these cases.

Maait stressed the continuation of field campaigns to combat tax evasion, with the ministry successfully collecting EGP 42.4m from 9,000 unregistered tax cases between December 2018 and July 2020.

The minister indicated that an initiative will be launched to raise the efficiency of VAT collection in Egypt. He explained that the initiative includes incentives, as well as financial and in-kind prizes, that are very valuable to those who register invoices or report non-issuance.

Advertising Area

https://dailyfeed.dailynewsegypt.com/2020/09/12/egypt-targets-16-5-tax-to-gdp-ratio-within-5-years-finance-minister/
Breaking News

No current breaking news

Receive our daily newsletter
Subscribe