Experts mixed on taxing Egyptians abroad
Ibrahim Mahlab, Egypt's Prime Minister - YOUM7/Ahmed Ramdan

CAIRO: Under the new constitution, the Egyptian Tax Authority can impose taxes on remittances from Egyptians living abroad, the state-run MENA news agency reported last week.

On Wednesday, the Egyptian Center for Public Opinion Research (Baseera) said financial remittances from Egyptians abroad increased by 84 percent over the past three years, reaching nearly $19 billion in the fiscal year 2012-2013. But despite a potential financial windfall, experts are divided over the issue of whether Egypt should impose such a tax.

Some economic experts say the tax would contribute to state services and boost Egypt’s economy. Others say the tax would increase the rate of tax evasion along with the suffering of Egyptians abroad, and push Egyptians abroad to stop money transfers, Al Nahar newspaper reported.

Dr. Alia Al-Mahdi, former dean for the Faculty of Economics and Political Science at Cairo University, told Al Nahar newspaper on Tuesday that applying such a tax will lead Egyptians abroad, particularly businessmen, to stop transferring money.

The tax could lead to financial disaster by increasing Egypt’s economic obstacles, Mahdi said.

Dr. Farag Abdel Fattah, an economics professor at Helwan University, said the tax would push Egyptians abroad to halt remittances, which would negatively impact Egypt’s foreign reserve.

On the other hand, Moukhtar Al Sharif, an economics professor at Mansoura University, said the tax would increase Egypt’s budget by an estimated 6 billion EGP, increase investments and improve services and facilities for citizens.

The Central Bank of Egypt’s latest statistical bulletin reported that financial remittances from Egyptians abroad in 2012-2013 increased to $18.7 billion in comparison to only $697.1 million in 2011-2012, Al Masry Al Youm reported. The net transactions of Egyptians abroad was valued at $9.7 billion in 2012 compared to $1 billion in the same period the previous year.

Meanwhile, the General Union of Egyptian Abroad has submitted letters to interim President Adly Mansour and Prime Minister Ibrahim Mahlab asking them to prove ETA’s claim that it can impose a tax on expats under the new constitution.

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