Daily News Egypt

Banking sector rejects value-added tax, seeks CBE’s assistance - Daily News Egypt

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Banking sector rejects value-added tax, seeks CBE’s assistance

Sources believe Amer is likely to agree to Federation of Egyptian Banks memo to reject tax

The banks operating in the local market rejected the Egyptian Tax Authority’s (ETA) request to register them in the value-added tax (VAT) on Monday.

The banks sought help from the new Governor of the Central Bank of Egypt (CBE) Tarek Amer to intervene with the Ministry of Finance and the ETA to exempt them from registering in that tax.

A high-level source, who attended the meeting but wished to remain anonymous, told Daily News Egypt the Federation of Egyptian Banks (FEB) drafted a memorandum detailing the banks’ rejection to register under the value added tax, finally and decisively, and with no chance to negotiate over the issue. The memo was submitted to Amer, to inform the Ministry of Finance and the ETA about it.

The source added that the memorandum was among the first issues presented to Amer directly after he officially took office on Sunday, and there are strong indicators of the CBE supporting banks in this issue.

The source explained that the ETA is trying to apply the VAT on the banking transactions as an alternative to the sales tax, although the banks are exempted from the sales tax by law.

The source said the ETA has insisted on applying the VAT on banking transactions, an idea that was completely rejected by the banks. The ETA’s suggestions were made during a meeting with bank representatives days ago.

According to the source, the ETA called on banks to register first in the VAT, while the nature of banking services subject to the tax will be determined later, which the banks rejected as well.

The bank representatives who attended the meeting said that simply registering in that tax means they will be at the mercy of the ETA, and that the tax may be applied on the banking operations at any time, which may open the door for a new dispute between the banks and the ETA.

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