Minister of Finance Ahmed Galal asserted that no taxes would be imposed in addition to the current tax law, and that combating tax evasion would not be made a tool for “settling scores” with businessmen, the State Information Service reported.
Galal announced that no property taxes or income taxes would be modified “in order to not harm the economy.”
He emphasised the ministry’s role is to “achieve justice between businessmen and the tax authority, without doing any harm to the state.”
The current tax law was established under the administration of ousted president Mohamed Morsi; when the former president was elected last June, the International Monetary Fund (IMF) requested that the government reduce its budget deficit, which was equal to 11.3% of the country’s GDP in 2013.
Morsi, who also acted as a legislative authority, introduced drastic economic reforms last December to qualify for the proposed $4.8bn IMF loan.
His initial decisions included an increase in taxes on a range of consumer goods and services like cement, steel, soft drinks, cigarettes among many other goods and services, although many were later withdrawn due to public outcry.
But in a televised interview in February, Morsi announced more reforms as well as the government’s attempt to help those with low wages and those who live hand-to-mouth.
He announced an increase in the minimum monthly income for income tax exemption to be raised from EGP 9,000 to EGP 12,000, saying that such a policy should help alleviate a tax burden on 2.5 million families.
This May, the Shura Council approved a new income tax law, two months before the military ousted Morsi.
Analysts viewed the move as a way for the government to comply to the IMF’s rules.
The current tax law, passed in May, widens the top tier tax bracket of 25%, formerly for those earning above EGP 10mn, to include those earning EGP 250,000. Those earning less than EGP 5,000 per annum were subject to no taxes, as under the old law.
The second tier tax bracket, previously for those earning between EGP 5,000 and EGP 20,000, now includes those earning up to EGP 30,000, who now pay 10% instead of the previous 15%.
Under the current law, all companies are subject to a unified tax rate of 25%, compared to the previous law that taxed those earning less than EGP 10mn per year at 20%.