The Ministry of Finance’s requested 22.5% income tax rate within the Suez Canal Economic Zone (SEZone) is too high and will be restudied, head of the SEZone Ahmed Darwish told Daily News Egypt Monday.
“If the studies show that a 22.5% tax is efficient, then I will call to amend the SEZone law through the upcoming parliament,” Darwish said.
Prior to the recent amendments, when it was first applied in 2003, the SEZone law stipulated that the income tax rate was 10%. However, Minister of Finance Hany Kadry Dimian has requested a higher rate in order to reduce the budget deficit, he explained.
In a conference organised by the US Chamber of Commerce in Cairo Monday, Darwish said the ministry’s claim is that multinational companies have 28% income taxes applied in their countries.
“The ministry states that even if they pay 10% there, they still pay 18% to their countries,” Darwish said. The ministry said it is better for the remaining percentage to be paid in Egypt.
Darwish had called for a study to be conducted on the tax rates, “to discover which companies have the 28% taxes applied to them”, since there are no customs in the Suez Canal zone.
Darwish further noted the law is different from other laws that govern other authorities; it is a “flexible” legal framework that allows him to give project approvals without having to go back to the Egyptian cabinet. He told Daily News Egypt that the studies for Singapore to establish a port in East Port Said are expected to be completed within six months.
The SEZone is allowed to establish its own projects, either on its own or in partnership with other companies. Darwish said they will invest in the six ports in the Suez Canal zone, which they own.
The current government has approved amendments to the Economic Zones of a Special Nature Law no. 83/2003 to act as a legislative framework for investing in the Suez Canal. It will convert the area into an economic authority with capabilities equivalent to ministries, governorates, and authorities.