Egypt Lowering Tax, Increasing Social Spending

February 26, 2013 Taxation in Egypt

EgyptCAIRO – Egypt plans to reduce its budgeary deficit, while still continuing to reduce tax burdens on the population and increasing social spending. 

In a television interview aired on February 24th the President of Egypt Mohamed Morsi announced several tax changes aimed at increasing the country’s economic growth, boosting the quality of life of the population, and increasing the likelihood that Egypt will be granted a new loan from the International Monetary Fund.

According to the president, the currently available exemption on income tax for individual taxpayers in Egypt will soon be raised from EGP 9 000 to EGP 12 000, and it is expected that the move will reduce the tax burdens felt by more than 2.5 million households in the country.

Mohamed Morsi also indicated that the social security pensions paid out to low-income families will be quadrupled, rising from EGP 100 to 400 per month.

The president announced that a new tax would be introduced in July this year on expensive properties valued at EGP 2 million or more, with nearly half of the money raised from the collection of this tax being set aside to be used to fund public services such as healthcare facilities and housing programs across Egypt.

In an effort to raise even greater tax revenues without hampering the livelihoods of individual taxpayers, the government will also introduce a gradual increase in the fuel taxes paid by business operating in energy-intensive industries.

Regarding the country’s budgetary position, the President said that over the course of this fiscal year the government will cap its deficit at 10.9 percent, and will reduce the shortfall to 9.5 percent in the next fiscal year.

The combined set of tax measures is intended to provide backing to the government’s current request for a USD 4.8 billion loan from the IMF.

Photo by goccmm