Egypt draft budget eyes tax rises on cement

Egypt draft budget eyes tax rises on cement
19 May 2010

Egypt is proposing a five per cent sales tax on cement instead of the current flat fee per tonne, newspapers reported on Wednesday.

The daily al-Mal newspaper compared the plan, which is included in the draft 2010/11 budget, to changes in some tax rules implemented in May 2008 that rattled investors.

Egypt’s financial year runs from July 1 to June 30, and the 2010/11 budget is now with parliament. Finance Minister Youssef Boutros-Ghali has previously said the deficit for that year would be 7.9 per cent of gross domestic product.

A parliament committee approved a supplementary budget report that included imposing the five per cent sales tax on the cement price, the state-run daily al-Ahram reported.

That would replace a flat fee of EGP1.40 on a 1t of imported cement and a fee of EGP2.50 on a 1t of local cement, the paper added.

In addition, it said the sales tax on steel would rise to eight per cent from five per cent.

Construction has boomed in Egypt despite a global downturn, fuelled by demand to meet housing needs in a country of 78m and a cash-driven economy largely insulated from international credit markets.

Demand for cement rose 25 per cent last year and the government has been offering new licences to boost capacity.

The draft also makes amendments to taxes on imported cigarettes, but al-Ahram did not give details.

The cement industry has been in the frame for new taxes. An official said in April that the health and finance ministries were studying imposing a 10 per cent tax on cement companies to raise funds for public health spending.

Published under Cement News