By Ahmed Amer
The Federation of Egyptian Industries (FEI) has submitted a proposal to the ministries of Industry and Finance to amend the tax and customs system in place for the automotive sector. The proposal includes reassessing the sales tax on local and imported cars to boost domestic products, and granting advantages and competitiveness against imported products, in light of new customs reductions on cars imported from Europe.
The proposal requested that price differences be established for local and imported cars of all types. The difference in sales tax currently imposed on domestic versus imported cars larger than two litres is 15%, 30% for domestic cars compared to 45% for imported cars.
The proposal suggested that sales tax on domestic cars with a capacity of less than 1.6 litres be set at 15% and 22.5% for imported cars. The development fees imposed on cars less than 1.6 litres would be 3% and 4.5% respectively.
Sales tax on locally assembled and manufactured cars with an engine capacity between 1.6-2 litres would reach 30% and 45% on imported cars, while the development fees would be 5% and 7.5% respectively.
As for cars with an engine capacity of over 2 litres, the proposal put forth a sales tax of 30% on local cars and 45% on imported cars with the development fee set at 8.5% and 12.75% respectively.
The proposal pointed out that the current sales tax and development fees imposed do not differentiate between domestic and imported whereby the sales tax with an engine capacity of less than 1.6litres reaches 15% and 3% for the development fee.
The proposal also noted that currently applied sales tax on cars with an engine capacity between 1.6-2.0 litres stands at 30% with a 5% development fee. It added that the sales tax on domestic cars with an engine capacity of over 2 litres is 30% and 45% for used cars with a development fee of 8.5%. This would be applied regardless of whether they are imported or domestic.
Table of the proposal:
| Proposal | Less than 1.6 litres | More than 1.6 till 2.0 | More than 2.0 | |||
| Local | Imported | Local | Imported | Local | Imported | |
| Sales Tax | 15% | 22.5% | 30% | 45% | 30% | 45% |
| Development Fee | 3% | 4.5% | 5% | 7.5% | 8.5% | 12.75% |
