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Egypt cancels tax exemptions for state agencies

February 1, 2024 at 9:56 am

A man counts Egyptian pounds at currency exchange shop in downtown Cairo. [KHALED DESOUKI/AFP via Getty Images]

The Egyptian Council of Ministers yesterday approved a draft law under which many tax and fee exemptions granted to state agencies will be cancelled, in implementation of a key condition set by the International Monetary Fund (IMF) in the $3 billion loan agreement signed a year ago, according to Reuters.

The government approved the draft law in June but had not yet determined the executive regulations necessary for implementation.

In a $3 billion financial support agreement signed in December 2022, the IMF urged Egypt to level the playing field and strengthen the rules of fair competition between the public and private sectors.

The government stated that the ruling on cancelling exemptions from taxes and fees applies to all investment or economic activities undertaken by state agencies.

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It added that these entities include units of the state’s administrative apparatus, local administration units, national public, service and economic bodies, agencies that have special budgets, as well as entities and companies owned by any of the aforementioned entities, whether directly or indirectly, and regardless of their legal form.

The government statement noted that the regulations do not apply “to military work and the requirements for defending the country or protecting national security.”

Since Abdel Fattah Al-Sisi took over as president of Egypt in a bloody military coup, the former head of the army has expanded the military’s control over the country’s economy. It runs businesses, produces goods and manages huge infrastructure projects, with locals saying they are unable to compete with its pricing as it benefits from tax breaks which are not available to its competitors.

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