EXCLUSIVE: Egyptian contractors request tax cut on imported equipment

23 August 2017

Sources say an official request has been submitted to the tax authority

The Egyptian Federation for Construction and Building Contractors (EFCBC) has requested tax reduction on imported equipment, sources have told MEED.

EFCBC has asked Egypt’s Tax Authority to bring down the tax on imported equipment to 5 per cent from the current 14 per cent.

Sources say an official request has been submitted to the tax authority.

Construction costs have continued to rise over the past year with many contractors unhappy with current market conditions. Many private sector firms have renegotiated packages with contractors to reflect new prices. Meanwhile contractors working on government schemes are still waiting for renegotiated contracts and compensation packages that were promised at beginning of the year.

The details of the compensation terms are unclear at this stage, but it is understood that compensation will be set as a percentage of the value of the contract with other conditions determined by the committee.The deal is likely to replicate a similar arrangement in 2003, when Cairo last significantly devalued its currency.

Construction costs have increased due to a number of a new measures applied by the government over the past year, including the additional value-added tax (VAT) on construction projects, which has been increased to about 6 to 8 per cent depending on the size of the scheme. The government has also lifted subsidies on fuel, which has inflated operational costs for many industries. The reform which has had the largest impact, however, is the flotation of the Egyptian pound last year. 

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