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Egypt's New Tax Strategy Aims to Strengthen Revenue and Business Relations

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The Egyptian government unveils a new tax strategy to enhance revenues and improve relations with the business community, addressing key issues such as tax evasion and compliance in alignment with IMF recommendations.

Egyptian Government Unveils New Tax Strategy to Boost Revenues

The Egyptian government has announced a new tax strategy aimed at improving relations between the Tax Authority and the business community, emphasizing its commitment to enhancing tax revenues as a primary source of funding for essential services. With expected public revenues for the fiscal year reaching 2.6 trillion pounds (approximately $53.6 billion), of which 2 trillion pounds (around $42.2 billion) are derived from taxes, the government is focused on increasing this figure by 33% compared to last year. This new approach is part of a broader effort to expand the tax base and integrate the informal economy into the official tax system.

Key Features of the New Tax System

The recently introduced tax facilities package includes several initiatives designed to simplify tax compliance for businesses. Notable measures include: - Expanding the tax base to encompass more businesses. - Streamlining the tax filing process to reduce bureaucratic hurdles. - Integrating informal economy projects into the formal tax structure. - Establishing a maximum late payment penalty that does not exceed the tax principal. - Accelerating the resolution of disputes and accumulated tax files. - Implementing a simplified tax system for businesses with annual revenues below 15 million pounds. - Raising the threshold for transfer pricing studies for international companies to 30 million pounds. - Launching a new central clearing system and a simplified VAT refund process.

These reforms are expected to enhance the efficiency of the Tax Authority and improve the overall relationship between the government and investors, addressing long-standing issues of tax evasion and compliance.

International Monetary Fund's Influence on Tax Reforms

The Egyptian government's new tax policies appear to align with the recommendations from the International Monetary Fund (IMF), which has stressed the importance of fiscal discipline and domestic revenue mobilization. As part of the Extended Fund Facility arrangement, Egypt is working on a strategic document for tax policy reform. Despite these positive steps, the government has yet to clarify plans for rationalizing tax exemptions and reforming the value-added tax system. The success of these initiatives could significantly impact the country's fiscal sustainability and economic growth moving forward.

Clam Reports
Refs: | Aljazeera |

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