A decision by Finance Minister Youssef Boutros-Ghali to impose a 10-percent profit tax on used automobile sales has drawn varying reactions among financial circles. As it currently stands, only the sales of new cars are subject to a tax, which is based on cars’ respective fuel capacities.
Legal Accountant Ashraf Abdel Ghani, for his part, described the size of the new tax–set at 10 percent of the median between the selling and buying prices, as was laid down in Law 157 of 2010–as “appropriate.” He pointed out that the decision served to bypass the issue of how to set taxes in cases where auomobiles were sold at a loss.
But Abdel Ghani went on to complain that the new scheme failed to sufficiently define the term “used,” while also being vague as to the destiny of cars purchased with tax invoices for which sales taxes had already been paid. He also questioned how exactly used automobiles would be valued, especially since most transactions would be done by individuals.
According to a senior official at the Egyptian Tax Authority, the new tax on used cars will depend largely on respective vehicles’ orginal sales prices. The source, who preferred to remain anonymous, also questioned the fate of other industrial products–many of which are currently subject to a 30-percent sales tax–and wondered if sales of these too would be handled similarly.
Legal Accountant Ashraf Abdel Ghani, for his part, described the size of the new tax–set at 10 percent of the median between the selling and buying prices, as was laid down in Law 157 of 2010–as “appropriate.” He pointed out that the decision served to bypass the issue of how to set taxes in cases where auomobiles were sold at a loss.
But Abdel Ghani went on to complain that the new scheme failed to sufficiently define the term “used,” while also being vague as to the destiny of cars purchased with tax invoices for which sales taxes had already been paid. He also questioned how exactly used automobiles would be valued, especially since most transactions would be done by individuals.
According to a senior official at the Egyptian Tax Authority, the new tax on used cars will depend largely on respective vehicles’ orginal sales prices. The source, who preferred to remain anonymous, also questioned the fate of other industrial products–many of which are currently subject to a 30-percent sales tax–and wondered if sales of these too would be handled similarly.
Walid Tawfiq, head of the automotive sector at the Federation of Egyptian Chambers of Commerce, for his part, argued that the new tax scheme would serve to correct past mistakes. He went on to say the decision would help prevent traders from registering used car sales.
Translated from the Arabic Edition.
Translated from the Arabic Edition.
