Egypt’s President Abdel Fattah al-Sisi ratified the Value-Added Tax (VAT) after it had been approved by Parliament last August, the official gazette reported on Thursday.
The Ministry of Finance is due to put the long-awaited law into action within one month, after issuing its bylaws.
The House of Representatives had set the VAT rate at 13 percent for the year 2016-17 instead of the government’s initial proposal of 14 per cent. However, the 14 percent rate will be imposed next year.
The new law also imposes a penalty between three and five years on tax evaders and a fine to between EGP 5,000 and EGP 50,000.
The VAT is expected to replace the current sales tax and broaden the tax base by subjecting all services to the tax while maintaining the principle of exempting basic goods and services that affect the poor, according to a cabinet statement in May.
The VAT is part of the government’s reform programme, which includes cuts to expensive energy subsidies and the introduction of other new tax measures, in an attempt to cut spending and meet conditions for a $US 12 billion three-year loan programme from the International Monetary Fund.
The loan is still subject to the final approval of the IMF executive committee.
Content by Aswat Masriya