The cabinet confirmed that Egypt’s petroleum based products are to be exempted from the value-added tax (VAT), which is yet to be presented to the parliament. Egypt’s fuel will not witness any price hikes, reported Nile Tv International.
Ahram Online wrote that in May 2016, the Egyptian Ministry of Finance listed 52 commodities and services that will be exempted from the new VAT; crude oil, natural gas, butane, raw materials extracted from mines and quarries, electricity, and mineral water are all categorized among these tax-exempted commodities.
The tariff, that has been approved by the cabinet since May, is set at a flat rate of 10%.
The government aims to stamp out tax evasion by applying the tax to each member in the chain of production of goods and services, including the final retail stage. Currently, sales taxes are imposed only during a product’s final sale to customers.
The Egyptian Minister of Finance, Amr El-Garhy, said that the inflation resulting from imposing the tax will be very limited, especially on the underprivileged citizens who have low-incomes; the inflation will range between 0.5% on low-income citizens, 1.5% on societal segments with higher income, and up to 2.3% on citizens with the highest incomes, cited Daily News Egypt.
The source quoted El-Garhy stressing that “VAT is currently essential for Egypt in order to reinforce the state’s revenues.” He also said that normally VAT ranges between 18-20% worldwide, while in Egypt it will stop at 14%.