Maait: Tax Evasion Devours 50% of State Revenues

Mohamed Maait, Minister of Finance said that the tax evasion rate in Egypt has reached about 50%, which requires merging the informal economy and restoring discipline to the tax system to end fraudulently.

This came during the Payment, FinTech & Digital Inclusion (PAFIX) forum within the activities of the International Cairo Technology (Cairo ICT 2020) conference in its twenty-fourth edition.

Maait emphasized that about 75% of the state's revenues arrive from taxes, which is vital to support the requirements of the health, education, transportation and housing sectors.

He pointed out that "tax evasion causes great harm to taxpayers and does not achieve the necessary justice that supports the national economy, resulting in an imbalance in the public budget."

He pointed out the necessity of controlling the tax system with mechanisms that ensure the collection of taxes, which is the state's right, stressing that Egypt took into consideration the experiences of other countries such as Mexico and Sudan to achieve tax justice.

The Minister revealed that the start of the electronic invoice system for all companies will begin abiding with from November 15, in addition to a launch a project to automate tax procedures during the next month, as well as activating the electronic receipt system in the near future.

Maait stressed the need to link the tax system with the customs system. "We have already gone a long way in the unified window process for the Customs Authority, and there is an integrated plan for all Egyptian ports to enter the system by June 30," Maait added.

In addition to implementing the documented information system for exports and imports, the ministry will speeding up problems solving, Which faces customs release operations, saving about $500 million daily.

Ibrahim Sarhan, Chairman of the Board of Directors of e-finance referred to the importance of the process of digital transformation of the economy, which is known as the adaptation of modern technology to serve the national economy through legislation and tax procedures, indicating that there are great challenges in this regard.

On his part, Sherif Kilani, head of tax advisory services for MENA region at Ernst & Young said that the comprehensive digital transformation of the tax system will achieve a comprehensive development process for all sectors of the state, adding that the procedures that take place within the tax system must comply with the aspirations of the state and be integrated into the state's finances.

Mohamed El-Bahi, head of the tax committee of the Federation of Egyptian Industries explained that the industrial sector suffers from the unfair competition of the parallel economy.

"We require the availability of mechanisms and technologies that achieve financial inclusion as tax evasion has become a challenge before the state," El-Bahi, noting that the volume of cash transactions amounted to about EGP 4 trillion.

El-Bahi emphasized that the process of merging the informal economy with the formal one and documenting financial transactions would strongly support the national economy.