Egypt to Swap Sales Tax for VAT
- Jan 16, 2014 | Gail Cole
The topic has been raised numerous times since 2007. Now it seems that Egypt is ready to move forward with replacing its general sales tax with a value added tax, or VAT. A plan detailing just how that change will occur is reportedly due out by the end of January, according to Mamdouh Omar, head of the Egypt’s Income Tax Authority.
Specifics have not yet been determined, but the VAT is expected to be between 10 and 12 percent. With a few exceptions, such as oil and wheat, it will be applied to all goods and services. Currently, sales tax is imposed on 17 different goods and services.
Certain goods will be taxed at a higher rate, Omar said. “The tax rate will be higher on other goods including alcoholic beverages, cigarettes and cars.”
The value added tax is considered by Egypt to be a “more ‘efficient’ tax scheme” that will “offer an effective medium of increasing its budget revenues.” Ahram Online reports that Egypt expects “an additional $46 billion from tax revenues, bolstered by an increased sales tax inflow from LE83 billion ($11.9 billion) to LE126.6 billion ($18.2 billion) if VAT is fully implemented."
Not everyone supports a value added tax. In September 2012, a spokesman of the United Nations Conference on Trade and Development called VAT “a regressive tax” that "leads to a redistribution of the wealth in the wrong direction.”
Do you sell globally? How do you manage value added tax?