Head of Taxes Committee at French Chamber of Commerce, Karim Imam stated that merging and acquisition markets in Egypt became very attractive -notably education, health, and energy sectors- since Gulf and European investors are currently competing to enter the Egyptian market.
Speaking to MEO, Imam said that one of the most important issues that the Finance Ministry settled within the last period, is overcoming the exchange rate discrepancy crisis that was ‘an awful nightmare’ for the taxes community during 2013- 2015. The ministry also settled one of the administrative files and restructured the Egyptian Taxes Authority to fill all job vacancies, accordingly, raising the efficiency of operations.
How do you evaluate laws recently issued by Finance Ministry ?
Tax Dispute Resolution Law reflects the trust between Tax Authority and financiers. One of the most important laws that has been issued was the latest version of Value Added Tax (VAT) law in addition to issuing the executive list of the VAT Law that was formulated with commendatory professionalism. The list considered the difference between both legislative and executive sides and was not far from reality nor industrial and investment societies’ expectations Another important issue that the ministry settled was the exchange rate discrepancy crisis that was ‘an awful nightmare’ for the taxes society during 2013, 2014, and 2015 after issuing a decree to calculate undocumented expenses.
How do you see the solution of the exchange rate discrepancy crisis that faced investors in 2016?
Calculating the exchange rate discrepancy crisis in 2016 was solved amid the Finance minister’s decree to calculate the discrepancy in the same year. The ministry also settled one of the administrative files and restructured the Egyptian Taxes Authority, to fill all vacancies, accordingly, raising the efficiency of operations.
What is your opinion about the Tax Dispute Resolution Law?
This law, which was issued in September 2016, is a great idea but it lacks promotional mechanisms notably after the trust between Tax Authority and financiers was lost. Thus, it needs to create a new climate of trust to urge financiers to resolve disputes.
Does the delay of issuing the small-sized enterprises law have any negative impacts?
The purpose of delaying the issuance of small-sized enterprises law is to convert from monetary economy to non financial economy, eventually, merging official and unofficial economies. Thus, the law needs an the unclear mechanisms of applying it. It was better to clarify its basics or design a more clear system for applying the capital gains tax in addition to a fair system for the investor.
How do you see the merging and acquisition markets in Egypt?
Merging and acquisition markets in Egypt became very attractive as the Egyptian assets became less expensive amongst the liberalising exchange rate of the Egyptian pound. Also, the recent economic reforms inclusive system that includes efforts of the Central Bank of Egypt (CBE) as well as a number of ministries and authorities.
How do you see the Finance Ministry’s decree to replace the capital gains tax on stock transactions with the stamp tax?
We have to be aware that the capital gains tax is not the reason that led investors to leave stock transactions since it does not represent real obstacles for them; the Egyptian case asserts this if we compared it with its European counterpart. All investors are foreigners, thus, they benefit from the deducted tax in their country. Additionally, Egypt has a number of deals for the avoidance of double taxation which would enable any foreign investor to make use of them.
So, why were investors confused about it?
They were confused because of encouraged investors to enter the Egyptian market.
What are the prominent sectors which investors seek to join?
Education, health, electricity, and energy are the most attractive sectors for direct investments. A number of firms working on implementing merging and acquisition deals received many requests from European and Gulf investors –notably the Saudi ones- to enter the Egyptian market.