Cairo – The House of Representatives approved in Egypt New amendments to the VAT law include contracting, cigarettes, and alcoholic drinks, as well as creating a valuable tax added to crude oil, which opens the door to questions about the expected repercussions of these tax policies on commodity and services prices.
The Egyptian Tax Authority, following the approval of the House of Representatives, stated that its aim is to make limited amendments to value -added tax, and that these amendments aim to expand the tax base and repair some distortions, in order to support the ability to finance spending increases to human development.
The Authority stressed at the same time not to prejudice the tax exemptions of basic and food commodities, as well as health and educational services, noting, in a statement, that the subject of crude oil to the table tax in a 10%category, instead of petroleum products, will not result in any additional increase in the prices of petroleum products in the local market.
What is the relationship of the IMF?
These tax amendments come about a month after the announcement International Monetary Fund Last month, the fifth review of the 8 billion dollars in the Egyptian Finance Program, signed in March 2024, but the fund indicated that the review of the rest of the policies will be completed later.
The fund said last week that it intends to collect the fifth and sixth reviews of the Egypt lending program in the fall of this year, in order to give the authorities more time to achieve the basic goals of its economic reform program.
In a periodic press statement, the Fund spokeswoman Julie Cosak said that the experts of the fund are working with the Egyptian authorities to put the finishing touches on the main measures of economic policy, especially those related to the role of the state in the economy.
The decision to integrate the two reviews delay the disbursement of a new batch of funds for Egypt for about 6 months, and Kozak said that it is too early to discuss the size of any amount expected to be disbursed with regard to the two counted reviews.
Monitoring modifications
The amendments to the House of Representatives are compatible with Egypt’s plans to implement procedures aimed at increasing the proceeds of the value -added tax, and this includes the inclusion of new sectors or the application of the tax on goods and destinations that were previously exempt, according to the recommendations of the IMF.
The Chairman of the Plan and Budget Committee in the House of Representatives, Fakhri Al -Faqi, revealed in previous statements to “Al -Jazeera Net” that there are amendments aimed at reviewing the list of goods and services exempt from value -added tax (about 57 commodities and service), to increase the tax revenue, and this was due to the change of the conditions that these exemptions previously required.
How new taxes are available?
The new amendments to the VAT law allow the government the following:
- Increasing the prices of local and imported cigarettes by about 23% and alcoholic beverages 15%.
- The contracting sector, construction and construction work to the general price of the tax by 14% instead of 5%.
- Creating a valuable tax added to crude oil by 10%.
The new tax amendments, approved by Parliament, aim to increase the tax revenue by about 105 billion pounds (2.1 billion dollars), according to the statements of the Council of the Council’s Plan and Budget Committee, Yasser Omar.
The collection increases the burdens
Economist Ahmed Khuzaim, head of the Development and Added value forum, criticized the Egyptian government’s expansion of what he called “the collection policy”, stressing that “the chronic deficit in the general budget is pushing the government to increase taxes and fees, as more than 64% of the budget goes to pay debts and its benefits, and will not stop at this point.”
He pointed out that the government funds the deficit of citizens, with taxes formed more than 80% of the revenues.
The spokesman told Al -Jazeera Net that the government means new taxes, direct taxes, while indirect taxes (such as fees, stamping and value -added tax on goods and services) lead to the increase in prices directly on the citizen.
Khazim expected that real estate prices will continue to rise as a result of the amendments.
Tax resources are one of the most important sources of financing the state budget 2026/2025, and the budget numbers come as follows:
- The tax revenue increases to 2.6 trillion pounds (52.78 billion dollars) equivalent to 83.4% of the total expected revenue of 3.1 trillion (62.93 billion dollars).
- The proceeds of the taxes on goods and services are expected to increase by 34.4%, to reach 1.103 trillion pounds (22.39 billion dollars).
- The value of the value -added tax is more likely to increase by 55.3%, to record 640.4 billion pounds (13 billion dollars).
No choice
On the other hand, the banking expert Sahar Al -Damati considered that “the recent amendments to the value -added tax are necessary to fill the financial deficit, given that a large part of the informal sector has not yet entered the tax system, and the government has not been successfully successful so far.”
She added to “Al -Jazeera Net” that the government directs the value -added tax as a source of revenue comes in the absence of solutions or other options to provide additional resources for spending, and in light of the current deficit in the budget.
Al -Damati expected that the value -added tax adjustments will affect consumers in the end, and that it would be a financial burden on citizens.
The banking expert warned of the growth of the benefits item in the budget, which pushes the government for such amendments that exhaust the state and the citizen together, according to her, stressing the need to expand the tax base and include the informal economy, and that this will be more effective and more effective in providing revenues.