Three percent of profits made by mobile companies in Egypt will be paid to the government in tax as it looks to raise LE750 million (US $115.71 million), which could see prices rise for consumers.
The estimation by Amr Badawy, Executive Director at the National Telecommunication Regulatory Authority, is part of an ongoing public debate in Egypt about new procedures.
He predicts 30 million cell phone lines will be sold within a year of the new tax being introduced.
Now that Telecom Egypt, the country’s only landline provider, is legally registered to provide complete cell phone services, this estimation is not considered far fetched.
Badawy explained that on top of the taxes on new lines, three percent of local mobile companies’ revenue will be eligible for tax deduction. This means the total tax will rise from 15 to 18 percent.
Following these considerations, Egyptian mobile phone operators Mobinil, Etisalat and Vodafone have already increased their subscription fees from less than LE10 (US$ 1.54) to LE18 (US$ 2.78).
Profits for Egyptian communication companies in 2011 stood at around LE30 billion (US$5 billion), according to the Egyptian Independent.
The Middle East, together with Africa, has been reported as the main area for tax increases since 2011, according to a Deloitte annual tax review. The rise in taxation is mainly owed to “proliferation of airtime excises, such that taxes as a proportion of usage costs”.
In the review, Egypt and Jordan are listed as mobile tax specific countries by Deloitte.
