27 February 2013

Egypt: Finance Minster - Sales Tax Cancelled

Finance Minister el-Morsi Hegazi announced the cancellation of the sales tax envisaged in the frozen tax amendments on all basic commodities, noting that the new tax amendments are very limited and do not lead to the disturbance of the financial situation.

He added in a press conference held Tuesday 26/2/2013 to review a rebound program that upping the tax exemption limit for households to L.E. 12,000 annually and for individuals to L.E. 7,000 would be applied in September at a cost of L.E. 3 billion during the current year, liable to increase to L.E. 4 billion next year.

Political stability and security are integral to economic progress, he said. Strikes and sits-in very much contribute to reducing the state tax revenue, he added.

The political and economic landscape is key to solving public debt problems, the Minister said, noting that foreign loans will not be needed if investments are flowing to Egypt's public and private sectors.

Investments have declined considerably given the unfavorable developments in Egypt, Hegazi said, adding that the government is forced to take loans.

The influx of investments will help increase Egypt's stock of foreign currencies and close the supply gap the country is facing, the Minister noted.

He praised efforts by the oil and supply ministries to rationalize subsidy. He expected oil subsidy to amount to L.E. 117 billion in this year's state budget.

The Egyptian government offers L.E. 1,600 worth of annual per-capita subsidy, Hegazi said.

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