Banking officials voiced their disapproval over the recent decision by the Shura Council to increase taxes on bank's loan loss provisions. Loan loss provisions are expenses set by banks to cover estimated losses on loans due to defaults and nonpayment. The decision, originally proposed by a Freedom and Justice Party member of the Shura Council, will cancel the tax deductibility granted to 80% of loan loss provisions held by Egyptian banks. The move was heavily criticized by banking figures who called for the decision to be rescinded as it will greatly affect the flow of investments into the country. The combined total of the provisions in the Egyptian banking system exceeded some EGP 57bn. Finance Minister Fayed Abdel Moniem is expected to meet with representatives from the banking sector to discuss their concerns regarding the decision. The amendments are to be discussed after they're submitted to the legislature for debate. The Shura Council has also approved a new tax scheme last week in which all companies would be taxed at a unified rate of 25%, compared to an old law that charged those earning less than EGP 10m per year at only 20%. A new income tax law was also approved last week to increase taxes paid by the wealthy and reduce those with lower incomes.
