Egypt VAT reform earns credit upgrade
- 30 December 2014 | Richard Asquith
Egypt's proposed VAT implementation has contributed to a credit upgrade from on the the leading global resting agencies, Fitch
Egypt plans VAT implementation
Egypt currently has a simple 10% sales tax. Aside from being applied to only a narrow base of products, which makes the revenue unstable, it also has limited scope for recovery for companies which suffer any of the tax. This can lead to double taxation. It has been estimated by the International Monetary Fund that replacing the Sales Tax with a fully reclaimable VAT regime could add over 1% to the country's GDP.
Fitch has included plans to introduce VAT in Egypt in its latest upgrade of the country's currency bonds (debt). The agency sees this type of reform to the economy's structure will put it on a strong footing for competition for global manufacturers looking to locate their regional workforces. One of Egypt's key competitors, Turkey, already operates an 18% VAT rate regime.