Engineer Mohamed Sami Saad, Chairman of the Egyptian Federation of Construction and Building Contractors, said that the new amendments are still under study, especially since the implementation mechanisms remain unclear. He noted that members of the Federation's Board of Directors and officials from contracting companies will hold a meeting to discuss these amendments and their impact on activity.
The Ministry of Finance announced that, to reduce burdens, we aim to subject contracting companies to the general tax rate instead of the 5% schedule tax, with the deduction of all taxes due and paid on inputs, whether goods or services. The Ministry noted that the cost of contracting services may decrease as a result of deducting taxes paid on inputs and excluding them from the tax base.
Saad explained that the contracting sector operates under two types of taxes: the first is a 14% value-added tax (VAT) and the other is a 5% schedule tax. The latter was abolished by a decision of the Ministry of Finance, with a deduction for production requirements. He noted that the Federation will refer the matter to a committee of specialists for a more detailed review.
According to the Ministry of Finance's statement, contractors will be granted the right to deduct or refund the tax paid on machinery and equipment used in the performance of contracting services, taking into account that contractors submitting all their purchases from suppliers to benefit from the tax deduction helps us expand the tax base.