The Egyptian government has put forward amendments to the value-added tax (VAT) law that includes raising its rate on snacks and flour-based sweets to 14%, from the current 5%. The suggested amendments are still subject to the House of Representatives’ approval.

Naeem Research sees that the amendments, if approved, would affect snacks and sweet manufacturers badly, while they have already been negatively impacted by the novel coronavirus (COVID-19) pandemic.

On the other hand, the amendments also stipulate that some specific local raw materials will be exempted from VAT, offsetting some of the negative impacts on demand, Naeem Research added.

In a related context, real estate development companies are pushing to exempt sale and rent of non-residential units from VAT. They say that the move could increase costs for companies already suffering from reduced demand due to the pandemic.

The amendments, prepared by the government, aims to address tax distortions in the current law, which imposes tax on some non-residential units only. Under the current law, only commercial and administrative units rented in malls are subject to VAT, while non-residential units outside malls are tax exempted.

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