Egypt Approves New Cigarette VAT

Egypt will impose a new value-added tax of EGP0.50 ($0.02) on locally sold tobacco products, reports Ahram Online.

On Oct. 29, the House of Representatives approved an amendment to the 2016 VAT law to allow for the new duty, which will apply to both “hot” tobacco (cigarettes) and “liquid” tobacco (vapes), according to Fakhri El-Fiqi, head of the House’s Planning and Budget Committee.

Egypt’s tobacco market has been in turmoil in recent months, with consumers facing cigarette shortages and price hikes, among other challenges.

“The new amendment will also encourage tobacco companies to increase production in a way that shall stem the rise in cigarette prices and satisfy consumers,” said El-Fiqi, who predicted the next tax would generate up to EGP8 billion in revenues for the state budget.

Some lawmakers praised the measure as method to discourage smoking in line with World Health Organization recommendations.

“There is no question that the hike in cigarette prices will push more citizens, particularly young people, to give up smoking,” said Hesham El-Hosary, chairman of the House’s Agriculture and Irrigation Committee.

Despite the recently announced tax hike, cigarettes in Egypt are still cheap compared to other countries. In France, for example, some brands of cigarettes sells for the equivalent of EGP600 per pack, according to Ayman Abul-Ela, deputy chairman of the House’s Human Rights Committee.