Tax holidays in Egypt are now a thing of the past, according to Deputy Finance Minister for taxation Amr Al-Monayer. Addressing a seminar on reforming tax policy in Egypt at the Egyptian Centre for Economic Studies (ECES), an NGO, on Monday, he said that in the new investment law there could be tax deductions tied to key performance indicators. A stable tax policy is what policy-makers are working hard to achieve, Al-Monayer said, adding that there was a need to work out a long-term plan to improve overall tax revenues. Taxes represented 13 per cent of GDP, he said. “If we can increase this figure by one per cent annually for five years we can reach international levels,” he added. Taxes as a percentage of GDP are around 27 per cent in the US and 35 per cent in the UK. To achieve that target in Egypt, Al-Monayer said, reform must take place on legislation, administration and awareness. “The aim is not for immediate returns, but for the future,” he said, adding that for many years there had been no tax reforms in Egypt. The use of information technology by the Tax Authority had not been upgraded since 2010, and this had affected data connectivity with other authorities. That was changing, and there would be reforms to information technology, as well as to the work environment and training. Al-Monayer also spoke of broadening the tax base by including more small and medium enterprises (SMEs). These will be required to observe a simplified system of paper work, he explained, but there was an overall need to convert the country from a cash-based economy to a cashless one in order to help track transactions and therefore tax liabilities. Egypt is one of the biggest cash-based economies in the world at present, and only some 10 per cent of people deal with banks. Even this figure is inaccurate, as their dealings may be limited to cashing in their salaries, Al-Monayer said. Commenting on objections by some professions, including lawyers, that the new value added tax (VAT) should not be applied to them, he said that the rest of the world subjected the professions to VAT. In Egypt, professionals did not want to open their books and reveal their incomes, he added. At present, tax revenues from lawyers amount to only LE74 million, and taxes from all professionals represent only one per cent of total tax revenues, Al-Monayer said. The country's real estate tax is considered one of the fairest because it is a tax on wealth, he said, adding that this tax was being implemented in the North Coast and Red Sea areas where beach homes line the shore. Getting hold of ownership information had been difficult because these homes were empty most of the time, he said, but now this has been resolved.
