Egypt's new income tax will not be above 25 per cent - deputy minister
Egypt is not planning to raise its top income tax bracket rate above 25 per cent, Osama Tawakol, the deputy finance minister, said on Sunday.
Egyptian President Mohamed Morsi announced in December sweeping increases in sales taxes and stamp duties on a wide range of consumer goods and services and ammendments to Egypt's income and property tax laws.
In reply to the widespread discontent the decision caused, the presidency retracted the tax law and ordered the government to carry out a "social dialogue" on the measures before implementation.
The new taxes were included in the cabinet's economic reform programme that is attached to a $4.8 billion loan Egypt is currently negotiating with the International Monetary Fund.
Tawakol assured that the idea behind the new income tax rates was to include larger portions of the population and channel extra funds to the most underprivileged; he also denied rumours that a 35 per cent tax will be imposed on individuals with a yearly income over LE25 million.
"Once the government decreased the income tax to an average of 20 per cent, government revenues increased substantially and cases of tax evasion decreased," claims Tawakol.
In 2004, ousted PM Nazif's government restructured income tax scales and implemented a universal 20 per cent top tax rate on all income.
The new tax law will only come to effect once it is ratified by Egypt's lower house (Shura Council), added Tawakol during a meeting with representatives of the Egyptian tax authority in Cairo and Alexandria.
"The Shura Council will ratify the new tax law only after it feels it had reached a level of popular consensus through the government-led national dialogues. So far, the dialogues have shown that disagreements over the tax law can easily be overcome," Tawakol told Al-Ahram's daily newspaper.
Egypt's lower house will thus ratify the tax law according to the agreements reached with opposition figures and state technocrats during the social dialogues.
The ministry of finance announced that it would amend the tax law with the goals of achieving social justice and tax equality.
The tax amendments are part of the government's quest to reduce its budget deficit, expected to edge above LE200 billion in the current 2012/13 fiscal year.