By Mohamed Fawzi
Egypt’s three cellular operators have transferred the cost of a recent tax on mobile top up cards to consumers. The move came as a result of recent amendments to Egypt’s tax code, which raised sales taxes from 15% to 18%.
Companies have decided to raise the service cost for mobile cards in preparation for submission to the Egyptian Tax Authority. The price of EGP 10 mobile cards is expected to rise by EGP 1.8, while the price of EGP 100 mobile cards is expected to go up EGP 18. Distributors are expected to raise their prices to preserve their profit margins.
An official from Vodafone Egypt said customers would be responsible for covering the cost of an increased 18% sales tax on mobile companies. This he stated was part of an attempt to re-structure the price of mobile services, which will see price increases on mobile cards.
Sources within a number of companies have stated that a recent decline in net profit for mobiles operators have contributed to the need to restructure financial support systems provided to users, however that this did not include raising taxes on products or users on the part of companies. Sources added that raising taxes was solely the responsibility of the government.
It was added that users needed to distinguish between increases in the price of mobile cards as a result of newly imposed taxes and the need for distributors to achieve profit margins. Sources went on to say that distributors should not take advantage of Egypt’s current political environment to increase their profit margins.
Moataz Othman, director of sales for one of Vodafone Egypt’s accredited outlets, said although EGP 10 mobile cards are sold to distributors for EGP 10, many sell them for more, with some charging as much as EGP 13.