CAIRO: Speculations were still rife on Wednesday over the constitutional court verdict ruling unconstitutional article 96 of the income tax law.
The court ruled on Sunday that the tax base of profits from commercial or industrial activities according to article 96 has already been subject to direct taxation, which constitutes a burden on the financers, conflicts with the constitutional protection of the right of ownership, and negatively impacts investment, saving, and labor prospects in Egypt.
Member of the board for the head of the taxation authority, Mustafa Abdul Kader welcomed the ruling, saying that while the pronouncement of the court s ruling has not been officially made public, the tax authority will comply with the ruling. Ruling on the constitutionality of laws lies within the jurisdictions of the constitutional court. We accept and will comply with the court s verdict.
Mustafa, who is also the director general in charge of international treaties at the tax authority, told The Daily Star Egypt that his initial reaction to the ruling that it was in line with the general philosophy of the principal of taxation in Egypt, in terms of lowering tax duties and broadening the taxation categories, stressing the that law will have the most impact on high income tax payers rather than low income citizens.
However, investors and industry observers were skeptical about the possible real impact of the court ruling, speculating, in the absence of the verdict being announced, and amid a lack of information, that the ruling might not set a legal precedence, but is instead an individual ruling.
Secretary General of the Arab Investors Union, and Director of the Egyptian European Partnership Program, Gamal El Dien Bayoumi, expressed fears that the government will try to obstruct the implementation of this ruling.
Actually, the government looks warily at this verdict, and will try strip it from it significance, he told The Daily Star Egypt.
He said the ruling dents tax revenues, while at the same time giving tax holidays to the rich, and introducing strict penal measures.
We are skeptical about the new taxation laws in general, as they stipulate harsh penalty measures, that mount to incarceration for tax evasion, which raises risks to investment, while in the end result not being much different from the old laws, he said.
Industry observers also downplayed the significance of the verdict, saying that income tax was not a substantial burden on corporate taxpayers to start with.
The verdict will most likely impact future tax transactions, but big debtors to the tax authority could demand tax refunds on previous sums paid as stipulated by the old income tax law, said Muhammad Osman, an industry analyst
