Around 608 cases of tax evasion were recorded in on month, totalling some EGP 6bn, state-owned new agency MENA announced Monday. Evasion of commercial and professional activities contributed with over EGP 4.37bn to the total amount.
“A reform in the taxation system is needed,” said Magdy Toulba, an economic expert and chairman of Arabian House of Consultancy for Financial and Economic Investment.
On the needed reforms, Toulba pointed out that citizens “must start feeling the effect of the taxes reflecting in services offered to them such as improvements in the health and education sector.”
Toulba stressed that differentiations in tax payments should be made among the different commercial and industrial sectors.
“Companies operating in the production and sales of food and beverages should be taxed the same way as companies that work on reclaiming deserted land,” Toulba added.
Around 180 cases were recorded in sales taxes amounting to EGP 1.824bn.
The Egyptian government has passed several new tax laws that target tax revenues’ increase amounting to EGP 364bn, compared to EGP 358 during fiscal year (FY) 2013/2014. Among the approved laws was the wealth tax law, which imposes 5% tax on incomes exceeding EGP 1m annually for a period of three years.
Minister of Finance Hany Kadry Dimian said that the informal economy is one of the most important factors increasing tax revenues, explaining that it “forms 40% of the Egyptian economy.”
President of the Tax Experts Association Ashraf Abdel Ghani argued in May that increasing the tax burden will not result in an increase in revenue, ruling out the finance ministry’s ability to increase revenue to EGP 10bn during the coming fiscal year.
“The imposition of additional taxes does not need to be accompanied by an increase in tax revenues. As the value of taxes imposed increases, the evasion rate will increase as well, especially with the lack of a regulatory system to prevent it,” Abdel Ghani said.
