A report on the Egyptian tax system

Egyptian government revenues depend importantly on two indirect taxes (on imports and on sales) and on two direct taxes (on business and personal). In addition to the revenue it provides, each tax affects the efficiency of the decisions that Egyptian consumers and producers take, the distribution of well-being in Egyptian society, and the burden of tax administration. These criteria form the basis of an assessment of all tax systems, although this report focuses almost exclusively on the statutory system and therefore does not systematically document how the system actually works. This paper analyzes the Egyptian tax system during the months of September and October of 1991. The paper proceeds to review some general issues in the design of tax systems for developing countries and it provides a brief overview of the sources of tax revenue in Egypt. The report discusses the indirect taxes, mainly the tariff system and the sales tax. It discusses the taxation of income from property and the taxation of income from labor. It also discusses the administration of the statutory system, in which large discrepancies between the law and its implementation can have very important economic effects.