(AFP Photo)
A recent study issued by eFinance stated that electronic tax payments will cause Egypt’s GNP to grow if leading taxpayers make their payments electronically.
If taxes are paid electronically, GNP will increase by approximately 0.75%, it added.
According to the study, converting 10% of the country’s total payments into electronic payments within the Middle East and North Africa increases GNP by 1%.
The study, which is based on others conducted by global research centres and the International Monetary Fund, also stated that total tax rates represent an average of 15% of GDP.
According to the study, 80% of Egypt’s taxes come from individuals and companies that represent 20% of the tax base, a total of approximately 3,300 top taxpayers along with some intermediate taxpayers.
Using the electronic system increases the availability of liquidity necessary to fund companies and individuals with loans. Loan amounts are tied to the availability of liquidity, which in the end could serve as a boost in Egypt’s economy.
The finance ministry hopes to increase tax collection for the 2014/2015 fiscal year from EGP 358bn collected last year to EGP 364bn, according to a statement issued by the ministry.
eFinance said that the percentage of the formal economy in developing countries that utilises electronic payment amounts to 56%. It added that the formal electronic economy in developed countries represents 86% of the economy and the informal 14%.
The study cites another study carried out by Austria’s University of Linz and Visa, which said that increasing the volume of electronic payments among the tax base results in a positive impact on the size of the formal economy and reduces the size of the shadow economy.
The study says that there is a strong inverse relationship between increasing online payment transactions and the volume of the shadow economy. An increase in online payment transactions decreases the size of the informal economy in comparison to the formal economy.
The eFinance study is based on a European Bank for Reconstruction and Development study that states that developing countries pay 44% of companies’ regular bribes in order to facilitate their business.
Taxes on these bribes account for 3.7% of corporate earnings.
The study added that there are several countries that have adopted mechanised payment and collection in order to spread awareness of the significance of this medium to the national economy.
