Egypt’s Finance Minister Mohamed Maait has unveiled some of the new tax incentives included in the Micro, Small and Medium Enterprises (SMEs) Development Law.
The minister’s breakdown of the incentives comes as part of the national campaign to create greater tax awareness in Egypt.
Maait said that Micro, Small and Medium Enterprises (MSMEs) can now benefit from a simplified tax system which will create greater confidence among their owners. The simplified system aims to develop MSMEs as pillars of economic growth, and which can generate jobs.
In a statement issued by the Ministry of Finance on Monday, Maait said that under the new law, taxes will be definitively simplified according to the volume of sales or businesses. As part of this, MSMEs will have no need for purchase books, documents or invoices.
The volume of sales or business is determined by the approval of the business owner, through a simplified annual tax declaration that the Egyptian Tax Authority (ETA) would refer to.
Addressing business owners, Maait said, “You are an expert yourself. You will not go to the tax authority, and a tax officer will not visit you, and neither would you need an accountant.”
Egypt’s Finance Minister added that the new law allows for business owners to determine the volume of their own sales.
Should they be less than EGP 250,000, the business will report taxes of EGP 1,000 annually. If they are less than EGP 500,000, the business will report taxes of EGP 2,500 annually, and if they are less than EGP 1m, then the business will report taxes of EGP 5,000 annually.
For those businesses reporting sales of EGP 1m-EGP 2m, then the tax will be 0.5% of the volume of sales or business. If they range from EGP 2m-EGP 3m, the tax will be 0.75% of that amount. If they range from EGP 3m-EGP 10m, the tax will be 1%.
Egypt’s Finance Minister called on MSME owners to accelerate their registration with the Micro, Small, and Medium Enterprise Development Agency (MSMEDA).
He added that, in the event of losses or an increase in the definitive or proportional tax established under the Small, Medium and Micro Enterprises Development Law for the value determined according to the Income Tax Law, businesses can request to be charged for the lower value.
This would be in accordance with the income tax law, to ensure that losses are carried over for several years. A business can be re-referred to the umbrella of the Small Enterprises Law in five years.