According to Egypt's Finance Minister, Dr. Ahmed Galal, a value-added tax (VAT) will boost the Egyptian tax system. Specifically, Galal says that a VAT will lead to a fairer distribution of taxes, add services to the tax base, and increase competitiveness by allowing tax credits.
The VAT could be structured under a 10 percent rate, and replace sales tax rates that range from 5 to 45 percent. Rate concessions would be provided for essential commodities and services.The International Monetary Fund (IMF) has recently deferred a loan to Egypt worth approximately USD4.8bn, and stated that negotiations will recommence when Egypt regains political stability.
The IMF previously stated the importance of an Egyptian VAT: "A number of fundamental structural reforms, including the transition to a VAT-like consumption tax and reform of the highly inequitable and costly system of subsidies, are needed to improve the efficiency of public spending and help reduce the fiscal deficit in the medium term."