Egypt ranked 167th globally, out of 190 countries, according to the World Bank (WB) and PricewaterhouseCoopers (PwC)’s Paying Taxes 2018 report, which rates countries by ease of complying with tax laws.
Paying Taxes 2018 is one of the elements of the WB’s Doing Business 2018 study, in which Egypt ranked 128.
Using the perspective of a medium-sized domestic manufacturer, Paying Taxes looks at how the case study company interacts with tax systems in 190 economies around the world. It assesses not just the amount of taxes paid, but how long it takes the company to meet its tax compliance obligations. This includes the time to prepare files and pay the main taxes, as well as the time taken to claim a VAT refund and to deal with a correction to a corporate income tax return.
Globally, “on average it takes our case study company 240 hours to comply with its taxes, it makes 24 payments, and has an average Total Tax and Contribution Rate (TTCR) of 40.5%,” the report said.
According to the report, the Middle East is still the easiest region in which to pay taxes. Meanwhile, the region continues to have the lowest TTCR and time to comply, but it is, however, the second hardest region for post-filing.
The report stated that the forthcoming introduction of VAT in some economies in the region is expected to affect future results.
On the other hand, the report revealed that Africa is the highest region in terms of payments, as an average of 35.4 payments are made on the continent, and has the second highest TTCR and time to comply after South America, as Africa has an average TTCR of 47.1%, and it takes 285 hours to comply with the continent’s taxes.
In Egypt, the case study company took 392 hours to comply with its taxes (no change compared to last year’s report).
Meanwhile, the report explained that the corporate income tax takes an average of 69 hours to comply with, labour taxes take 165 hours, and consumption taxes take 158 hours, placing Egypt among the 11 slowest countries in Africa in terms of tax compliance.
Egypt makes 29 payments (no change from last year). Meanwhile, it has a TTCR of 45.3% compared to 43.5% last year.
According to the study, labour taxes account for 27.3% of Egypt’s total tax contributions, while profit and other taxes account for 13.6% and 4.4% respectively.
The study explained that the 29 payments include one profit tax, 12 labour taxes, and 16 other taxes.
In terms of the post-filing processes for value added tax (VAT) and corporate income tax (CIT) returns, Egypt scores 26.6, down from 29.1 in the 2017 report.
According to the draft budget sent to parliament for approval, which Daily News Egypt obtained a copy of, tax revenues targeted in fiscal year (FY) 2018/19 increased by EGP 166.38bn to register at EGP 770.28bn, rising from EGP 603.9bn in the FY 2017/18 budget, a 27.55% increase.
One of the most prominent targeted tax revenues increase was taxes on income, which accounts for EGP 45.5bn in the FY 2018/19 draft budget, an increase of 40% compared to EGP 32.4bn in the previous year.
On the other hand, the total VAT revenues, which included both VAT and tax table rates (tax rate schedule), accounted for EGP 320.148bn in the FY 2018/19 budget, up from EGP 252.770bn in FY 2017/18.
The country is targeting around EGP 58.524bn in revenues from tobacco taxes, rising from the expected revenues of EGP 51.452bn this financial year, which ends in June.
With regards to customs duties taxes, the government aims to increase them by EGP 8.9bn to reach EGP 45.328bn in FY 2018/19.
Moreover, bills and bonds tax revenues witnessed a huge increase of 52.2% to reach EGP 59.57bn in the FY 2018/19 draft budget, up from EGP 39.133bn in FY 2017/18.
Predicted tax collections from state institutions, such as the Central Bank of Egypt, the Suez Canal Authority, and the Egyptian General Petroleum Company, reached EGP 168.2bn, up from EGP 142.946bn in the current fiscal year.
Meanwhile, expected capital movement tax revenues in the FY 2018/19 budget reached EGP 30.865bn, which almost doubled from EGP 16.766bn in the FY 2017/18 budget.