Egyptian Tax Revenues Above Projections

July 19, 2010 Taxation in Egypt

IMFCPresser_3Growth in Egypt’s economic activity and effectiveness of recent tax reforms have led to an extra EGP 12 billion (approx. USD 2.11 billion) in the Government’s budget during the previous fiscal year.

Throughout the 2009 fiscal year, the Egyptian economy grew by an estimated 5.2 percent, leading to a 6 percent increase in tax revenues, when compared to the previous year. The latest figures were released by Youssef Boutros-Ghali, Finance Minister of Egypt, in a media-statement on July 18th. According to his statement, the country’s total tax revenue of EGP 148 billion (approx. USD 26.45 billion) was EGP 12 billion (approx. USD 2.14 billion) above projections. Sales Tax revenue reached EGP 55.7 billion (approx. USD 9.78 billion) in the 2009 fiscal year. Cumulatively, corporate income tax and personal income tax revenue were reported to be EGP 92.4 billion (approx. USD 16.22 billion). For the 2010 fiscal year, the Finance Ministry of Egypt has already projected tax revenues of EGP 197.27 billion (approx. USD 34.63 billion). The Government has stated that it will aim to increase annual tax revenues to above EGP 400 billion (approx. USD 70.22 billion) within five years.

The Government of Egypt has already enacted several plans to continue the country’s economic growth. By the end of 2010, a new property tax law will be enacted, which is expected to garner an approximate EGP 2.4 billion (approx. USD 421.32 million) annually. In May 2010 the Government opted to capitalize on the country’s strong construction sector by imposing 5 percent sales tax on cement, and increasing the sales tax rate on steel. The Government will also continue to carry out programs aimed at improving tax compliance, and consider further tax revenue raising fiscal policies.

Considering Egypt’s positive fiscal position and upcoming economic expansion plans, the International Monetary Fund (IMF) has recently deemed the Government’s intentions to lower the country’s budget deficit to 3 percent of GDP as perfectly feasible. Egypt’s current budget deficit is 8.3 percent of GDP.

Photo by International Monetary Fund