In a significant move aimed at strengthening Egypt’s economy, Finance Minister Ahmed Kouchouk has announced plans for a simplified tax system tailored to assist small and medium-sized enterprises (SMEs), entrepreneurs, and professionals. This initiative is a vital part of the government’s broader strategy to stimulate investment and foster growth within the private sector.
Tax Reforms for All Taxpayers
During a recent meeting with the Egyptian Federation of Investors Associations and Institutions, Kouchouk highlighted that the initial phase of these tax reforms will offer effective solutions to the challenges both large and small taxpayers face. By reinstating sample-based audits for all taxpayers, the government aims to enhance trust and collaboration between tax authorities and the business community.
Simplified VAT and Enhanced Incentives
A key focus of this proposed tax system is the simplification of the Value-Added Tax (VAT) refund process, which will see refunds doubled. Kouchouk emphasized the introduction of new incentives to resolve outstanding tax disputes, with penalties limited to the original tax amount. An innovative electronic settlement system will also be implemented to improve liquidity, allowing quicker clearance of receivables and government debts for investors.
Support for SMEs and Professionals
This new tax framework is poised to benefit SMEs, professionals, and entrepreneurs with annual revenues of up to EGP 15 million. The reforms will encompass a variety of incentives, exemptions, and simplifications in several tax areas, including income tax, VAT, stamp duty, and state resource development fees. Notably, capital gains tax and profit distribution tax will be exempt, alongside reductions in stamp duty and fees related to registration and notarization.
Financial Commitments to Exporters
Reiterating the government’s dedication to expanding its financial policies, Kouchouk revealed that 50% of exporters’ pending dues would be paid in cash over the next four years, beginning this fiscal year, with annual allocations of EGP 8 billion.
For the first time, dues from exporters for the fiscal year 2024/2025 will be settled within the same year, with an initial payment already made. Additionally, half of the exporters’ arrears will be addressed through offsets against future tax, customs, and utility payments.
Facilitated Financing for Industrial Growth
The Finance Minister further announced plans for industrial companies to access easier financing for production lines, with the state absorbing interest rate differentials to bolster capacity and stimulate economic growth.
Positive Reception from Business Leaders
In response to these developments, Moharam Helal, Chairperson of the Egyptian Federation of Investors Associations (EFIA), commended the Finance Minister for his investment-centric reforms. He expressed appreciation for the initiatives aimed at tackling significant business challenges while fostering a new relationship built on trust between the tax authority and the business community.
These proposed changes mark a crucial step toward creating a more supportive environment for businesses in Egypt, ultimately leading to enhanced economic resilience and growth.
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