Egypt is close to issuing a new income tax draft law that will include taxes on advertisements posted on social media and other online platforms, the country’s finance minister Dr. Mohamed Maait, said earlier this week, according to different local and regional publications.
Here Is All You Need To Know
- According to the reports, companies using ads on social media platforms including Facebook, Twitter & Instagram, and search ads on Google, will have to pay 15-20% stamp tax. The tax will supposedly be charged on the total cost of the ads.
- The latest statement that Egypt’s finance minister made during a meeting with representatives of Facebook does not offer any details about the taxes.
- The minister said Egypt is looking to benefit from Facebook’s international experience in the area of tax on advertisements made on online services and social media platforms.
- He however noted that as soon as the new law is drafted, it will be submitted by the ministry to all concerned bodies, including Facebook, to hear their opinion and proposals.
- The minister explained that the law is a part of Egypt’s plans to integrate parallel economy with the formal one without harming interests of entrepreneurs, with the aim of achieving equal competitiveness in the market.
Digital Tax Revolution Under Way In Most African Countries: Google Hits Back
As more African countries are turning to digital tax, US technology company, Google is warning that such could spark trade wars with other countries.
In Kenya, for instance, Google told Members of Parliament that Kenya’s bid to introduce amendments to the Finance Bill 2019 to slap online businesses with an income tax contravenes international tax system would most likely meet retaliatory responses from other countries.
Google noted that the international tax system requires companies to pay their corporate tax in the countries where their products and services are created and not where they are consumed.
Google Kenya representative Michael Murungi told MPs that if the law is passed, it could set Kenya on a collision path with other nations.
“The risk with this is as we see happening in France after its decision to impose a unilateral tax on international firms on digital platforms,” Murungi said.
“France is now in the midst of a trade dispute with the US Treasury because of that tax which was seen as targeting Google and other multinational firms based in the US,” Murungi told House Finance committee during public hearings on the Finance Bill.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.