رشا عبدالعال رئيس مصلحة الضرائب فى حوار مع «روزاليوسف»: أيادينا ممدودة لكل الممولين والمنظومة تتطور لخدمة الاستثمار والمواطنين
Egypt is currently witnessing many changes regarding the tax system in an effort to create an investment climate and solve tax problems with investors to be an attractive tool by simplifying procedures, ending disputes with financiers, and establishing a robust system that attracts small and medium enterprises to join the official system through the first facilitation package. We spoke to Rasha Abdel-Al, head of the Egyptian Tax Authority, to learn closely about the tax authorities’ plans regarding tax facilitation and developments in the tax arena.
■ Where do we stand regarding the tax facilitation package that was announced? About it?
– The main goal that we would like to emphasize from the efforts made in this file is to encourage investment without regard to the tax revenue by changing the mental image that has been established for years among investors and financiers, and we extend a hand Help for small projects to grow on a regular basis, and indeed we saw this in our meetings with the tax community, where the beginning of trust with financiers was supported through community dialogues with individuals connected to tax affairs. The facilitation is mainly based on seeking to reduce procedures, end tax disputes in a satisfactory manner, and exploit the capabilities of… The government is currently mechanizing the process of facilitating procedures.
■ When will it go into effect?
– As of this January, many projects will begin. Facilitations in application, which is the most important factor for judging these facilitations, and they were widely accepted by society.
We took into account reducing the legislative amendments, as we aim to greatly stabilize the Egyptian tax system from a legislative standpoint, but we had 3 amendments to draft laws, and they will be dealt with. With the rest of the facilitations through ministerial decisions and decisions of the head of an internal department for ease of implementation, we are waiting for the rest of the laws to be ratified in the House of Representatives, and we aim during the month of January to have this package approved. Completely.
■ But what always worries society is the implementation and not the legislative aspect?
– Indeed, we are currently seeking to work internally to adjust the implementation procedures. For example, the Advance Opinion Unit has currently been updated. And the Investor Support Unit, where the prior opinion unit was transformed from a small committee to a unit that reports to the head of the department, and the role of the Investor Support Unit was also activated. Both units will deal with current and future financiers, both Egyptian and foreign, and procedures are currently being developed to support them. And automating their work and giving them powers to communicate with the tax community.
■ Will we see the launch of a new package of facilitations soon?
– The community dialogues that were held encouraged the tax community to send proposals regarding amendments and tax procedures, and we are We are currently studying it and prioritizing some proposals to be in the second or third package, and we expect to launch a new package of tax facilitation in the second half of 2025 in conjunction with the implementation of the first package this year.
■ Concern Does the business community always face the implementation of decisions and the procedural challenges that follow any tax decisions or legislation?
– I would like to reassure the business community about the actual implementation, as we have studied all the challenges, and the implementation mechanisms will be unified so that the procedure is equal between financiers in Cairo and another in any other governorate, where we established a higher committee headed by the head of the department whose mission is to follow up the implementation process. We also established 4 specialized committees in accordance with tax facilitation, including work teams in the executive areas that have powers to become a permanent operations room in the executive sites. To quickly solve any challenges to facilitate the implementation of facilitations, it will also receive complaints from financiers, and we will soon announce the mechanism for communicating with the new operating rooms.
■ What is new for the tax community to support investors by the Tax Administration?
– What we are currently doing is clear evidence of our true desire to support investment, as we formulate unified decisions to examine various activities in tax areas, and we will issue guidelines for them to unify examination mechanisms, especially new activities.
This is done in stages, the first It will include uncommon activities, including financial leasing, real estate development, and a range of other activities with the use of digital transformation, and verifying the consistency of these mechanisms with tax policies more comprehensively, and we will also announce them soon.
■ The law for resolving tax disputes has already been issued. How will it be implemented? Is it implemented?
– By obligating the taxpayer to submit a request to end a dispute, we will announce an electronic mechanism to submit a request to end the dispute on the Authority’s platform without going to any office, and we will have 6 months to receive requests to end disputes from The financiers then examine and finalize it.
I appeal to the tax community to quickly submit applications, and not to wait until the end of the period to quickly resolve disputes. To reap the benefits of this law early.
■ What about the incentives of the Small Enterprise Law?
– I consider it a qualitative shift in dealing with the business community; Because the law addresses all activities and does not exclude any activity, but only takes into account the size of the business, which is a fundamental point that was not present in any law before that.
– Clarity in dealing with all tax bases is one of the most important advantages of the new system, and thus determines The project and its transactions since the beginning of entering the system.
5 years without examining the third feature of the new law, which is an opportunity for growth. The main goal of these measures is not the complete outcome, but rather to include The informal economy to achieve tax justice in the market between a committed financier and a non-compliant financier.
– Your birth certificate starts from the first day of joining the system without regard to previous periods, and I tell them to rest assured, there are no claims for periods. Precedent.
■ What are your goals regarding the impact of facilitation on the size of the informal economy?
– There are many studies indicating that the size of the informal economy is 50% and others 55%, and there is no precise definition of the size of the economy. We aim to reach it through many procedures and means, including using simple media messages to educate them about the advantages of joining the official system. In the first phase, I expect to include about 100,000 financiers. Additional.
■ How will you work to reduce collection agencies?
– We are working to include taxes and fees related to the Tax Authority from other laws, and include them in the tax law; To be inclusive of all our types of taxes, there will not be any part in any law related to taxes because the investor looks at the tax law and then is surprised by other fees and taxes that he knows nothing about. Therefore, we seek to have all tax laws within the tax law.
■ Where are we internationally and regionally in terms of tax rates?
– Egypt is a very tax-attractive country as we fall in the middle bracket in terms of tax rates. When preparing a study with neighboring countries and countries with similar circumstances, and a study comparing the global situation, we found that The investor does not face any challenge regarding the tax rate as much as procedural or legislative challenges, and the tax rate in Egypt is very fair.
■ What about the value-added tax, will it witness adjustments in the coming period?
– Price The tax and registration limit will not witness any amendments in the coming period. As we fall into the lower end of the middle bracket for the value-added tax rate.
■ Increasing tax collection rates is one of the most important features of tax reforms. How are you working on that?
– Our main problem is the size of tax collection. Compared to the GDP due to the size of the parallel economy, it is much lower than other countries that have very high tax rates than Egypt, where current collection rates reach between 12 and 12.5%, but we are supposed to reach 21%, and this gap reveals the large amount of waste in tax revenues.
Incorporating the informal economy, horizontal expansion, and expanding the base of tax liability will achieve a major shift in public revenues, and thus the debt and interest rates paid, as international institutions confirm that we must Are we not talking about 17% tax collection rates in relation to the gross domestic product?
■ Ending arbitrary estimates is one of the most important challenges facing the tax community?
– Indeed, we are facing this problem. Due to the high size of files compared to the number of funders; Therefore, this problem will be faced by relying on the sample examination system and the risk level of the file, and thus I can, in stages, reduce the number of files that the warden is assigned to complete, in proportion to his human capacity; Which reduces arbitrary estimates, dries up the sources of tax disputes, and helps collect taxes faster
■ How do we plan to reformulate citizens’ tax awareness?
– In the past period, we studied the experiences of developed countries in tax compliance rates. Including Japan, where compliance rates reached 98%, we found that we are advanced as a tax system and in thinking about legislation and tax policy. We found that tax compliance is part of the educational curriculum, changing the culture, and enforcing the law firmly on non-compliant people. And it is severe because taxes are hated all over the world.
Indeed, we have addressed the Ministry of Education regarding developing curricula to respect the law. We are also working to build trust again with financiers by granting a period of 3 years to financiers to amend their declarations, starting from 2020, to submit an amended declaration. Without fines.
■ The process of electronic connectivity with government agencies.. Where has it reached?
– We have a plan to connect with 72 government agencies To exchange non-financial information, in the first stage we aim to link with 32 parties, and we have currently reached linkage with 12 parties, and we also have partial linkage with other parties, and the current obstacle to linking with the rest of the parties is that some parties are in the process of completing the digital transformation.
■ Has there been any movement in the file to amend the mechanism for calculating the solidarity contribution?
– Currently, we are committed to calculating it on total revenues and not net profit until there is a legislative amendment, which is the responsibility of the Ministry of Investment and Comprehensive Health Insurance. We are not a party to preparing the legislative amendment, and if the amendment is made, the calculation mechanism can be amended in the new filing season.
■ When will the electronic systems be completed?
– The stages of mandating the electronic invoice system have been completed. On April 30, 2023 to oblige all taxpayers of the Egyptian Tax Authority to submit the electronic invoice, but so far not all taxpayers have joined and we are working to enforce the law, and in the recent period there has been a daily addition to the numbers of those registered on the system and we currently have 1.3 billion documents and a huge database, and we have 40 million invoices monthly.
During the last fiscal year, we were able to collect more than 11 billion pounds of tax loss thanks to the application of the electronic invoice system. This number is currently witnessing a continuous increase, as a result of the disclosure About companies that sell fake invoices, which enhances the system’s ability to combat tax evasion and achieve revenues due to the state.
As for the electronic receipt system at the end 2025 We aim to end the mandatory stages. ■ What about the system for unifying standards for calculating the wages and salaries tax?
– The system for unifying standards for calculating the wages and salaries tax contributed significantly to enhancing salary tax revenues, as it recorded an increase of 35%. The system currently includes a system dedicated to state employees and another For private sector employees, which reflects the comprehensiveness and effectiveness of the application, and the number of employees covered by the system reached about 8 million employees.
■ Based on the talk about tax Salaries, will we see an increase in the tax exemption limit next year?
– This matter is currently under study in light of inflation rates, but we have not actually reached a decision, but we are constantly studying this file to raise the exempt segment and lift the tax burden on young people. Employees, and the wage tax unification system contributed to developing an accurate perception of average wages and the wage curve in the country.
■ How much do you target the size of tax revenues in the new budget?
– We aim to achieve linkage. Tax revenue, which is close to 2 trillion pounds by the end of the fiscal year, as we achieved 42% growth in tax revenues in the first quarter of the current fiscal year, and we may expect to collect about 2.5 trillion pounds in tax revenues in the next budget.
■ E-commerce taxes Are there any amendments regarding digital platforms?
– There are no legislative amendments, but we will have procedural amendments through the simplified registration system for digital platforms, which will achieve a billion-dollar boom for those who sell. Through these platforms, where you ask for the tax registration number, we have given them a mechanism to verify the validity of the tax registration for advertisers through them.
We will track the pages and websites that conduct electronic sales, in addition to raising awareness of the necessity of tax compliance.
■ Finally, on the personal level, as the first woman to head the Egyptian Tax Authority, how can I reconcile personal life and work?
– I am a mother and a wife, but at the same time I work hard to achieve the state’s ambitious goals in the field of taxes and great support. What I receive from my husband and children plays an essential role in my continuity and success, as they always encourage me to continue my work.
My day begins early in the morning and often extends until ten in the evening, and I realize that I would not have reached this position without God’s grace first and then The support of my family gives me the strength and energy to continue making this effort.
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