Moody's Welcomes Egyptian VAT

by Lorys Charalambous, Tax-News.com, Cyprus

06 September 2016

Credit ratings agency Moody's Investors Service has said Egypt's new value-added tax will help close a sizable gap in government finances.

Egypt is struggling with a fiscal deficit of about 12 percent of gross domestic product (GDP). In a statement ahead of Parliament's endorsement of Egypt's VAT regime at the end of August, the agency said that a VAT would help reduce the deficit to about 10 percent of GDP by the 2019 fiscal year.

"The expected introduction of value-added tax and measures to improve tax compliance will help increase government revenues and support a gradual reduction in the government's large fiscal deficit…," the agency said.

Egypt intends to introduce a VAT with a headline 13 percent rate from the 2016/17 fiscal year. The rate will rise to 14 percent from 2017/18.

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